Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Peter Harris: Democratizing the Music Industry with the Streaming Music Cooperative Resonate

Episode Date: January 24, 2017

After the successful Ethereum crowdfunding campaign, musician and web developer Peter Harris saw a path to creating a fair, decentralized music streaming platform. Out of that Resonate was born. Peter joined us to discuss why the dysfunctional structure of the music industry results in a bad deal for musicians and why a decentralized platform supported by blockchain technology and run as a cooperative represents a better way forward. Topics covered in this episode: How technology changed the ability of musician’s to make money Why streaming platforms don’t compensate musicians fairly The story of how Peter came to found resonate Why Stream-to-Own is a better way to compensate artists Why Resonate chose to build on BigchainDB The benefits of the cooperative structure for decentralized platforms The Resonate crowd-owning campaign Episode links: Resonate Website Resonate Crowd-Owning Campaign Resonate - Stream-to-Own Resonate - Building a Blockchain Database Epicenter 126: Trent McConaghy on BigchainDB COALA IP This episode is hosted by Brian Fabian Crain and Meher Roy. Show notes and listening options: epicenter.tv/167

This is Epicenter, Episode 167 with guest Peter Harris. This episode of Epicenter is brought you by Jax. Jax is a user-friendly wallet that works across all your devices and handles both Bitcoin and Ether. Go to JAAWX.I.O and embrace the future of cryptocurrency wallets. Hello and welcome to Epicenter, the show which talks about the technologies, projects, and startups driving decentralization and the global cryptocurrency revolution. My name is Brian Fabian Crane. And I'm a Herr-Roy.

Today, our focus is going to be on the music industry and how blockchain technology could perhaps change some of the models in the music industry. We are talking to Peter, who is the founder of Resonate, which is a project that seeks to create a music streaming platform that is owned cooperatively by listeners and the artists themselves. So before we start, perhaps let's have a bit of background from Peter. Peter, can you tell us a bit about your background and how you've done? came to be interested in the music industry and blockchains? So, yeah, my background is as a web developer since the 90s, and I did a lot of projects for musicians. And I was also a bedroom DJ and music producer.

So I was often uploading content to all the digital distribution platforms, you know, sort of just like right after Napster hit. So I kind of got this interesting perspective of working with a lot of clients who were very well-off and very famous in the music industry, as well as up-and-coming startup, musicians like garage bands and stuff. And then my own experience of trying to build a career online with my music. And so it was all of these kinds of different experiences that had been percolating around for quite some time.

And then when the Ethereum crowd sale happened in some, summer 2014, it all kind of started to come back in gel and they started to think about, ah, maybe this is the solution that we're looking for. That's interesting. So because when I was reading about Resonate and going through it, I was wondering whether this was something you kind of started independently of blockchain or, and then later you discover blockchain and kind of said, okay, this makes sense to add this in here. But it was the original inspiration for Resonate and what made you say,

okay, we can do this. There's something here because of Ethereum and because of what you saw happening in the blockchain space? Yeah, there was, there's a direct thread that connects those things to. And then what happened actually when I started getting going on Resonate is I hit this wall that I think a lot of people did where we realized, oh, well, actually, you know, the transaction speeds and throughput and all that of Bitcoin is terrible.

You can't actually do anything. and beyond like currency. And so I kind of imagine that it maybe would come back later. But in 2016, I was doing lots of workshops and speaking and events and stuff. And so I had a lot of exposure to the big chain folks. And that's when my perception started shifting like, oh, maybe this is actually possible to do now. Because the big issue there, you know, to do anything. music related on a blockchain is that, you know, if it's anything other than like selling a track,

there's just such a massive amount of data that, you know, the Bitcoin paradigm just wasn't going to work. So their technology really seemed like the best way to go in terms of being able to really deal with the massive data sets that we would create as well as, you know, transaction speeds and all that stuff. Cool. Well, we're going to get into technology in a bit later. And of course, also we'll link in the show notes to our episode we did with the Big Chandy B guys as well or with Trent. Now, the big problem you're trying to solve it, right, is that you're trying to find a better way that musicians make money and monetize their work. So I'd be really curious if you could kind of run us through the history of how historically musicians have monetized their work and how that has changed.

With different technologies that came along, you know, whether that was CDs, peer-to-peer file sharing, iTunes, or, you know, most recently the streaming platforms like Spotify and Apple Music. Yeah, I mean, this one topic could easily fill an hour because there's been such massive disruption across the board. In a lot of ways, I think that the music industry is kind of the canary in the coal mine for digitalization and changes in technology. and how it's really just decimated the business and a lot of livelihoods in the process while also liberating too. It's been a strange kind of dichotomy. So, you know, it used to be that the vast majority of recording happened through major record labels

because it was so expensive. You know, and so that was kind of the big first wave that happened is that digital recording allowed people to break free of that. So you didn't need to spend $50,000 to record an album. You could have $5,000 worth of equipment in your house and make an album. Now it's even less than that. And so that was kind of the first wave. And then of course, Napster and peer to peer changed everything overnight. And so that was sort of where the starting point for me was, was that I was living in L.A. and had a lot of clients in the industry there. And they were all kind of asking us, like, what's going to happen next?

And it was really clear that the recording industry just didn't get it. They thought they were going to be able to put the genie back in the bottle, so to speak, that they could just throw a bunch of lawsuits out and it would all just go away. They just had no clue what had happened. And so that was this kind of obsessive question for me was, where is this going to go? And so you mentioned the industry has gotten decimated. Does that mean it's become harder for musicians to make a living and make money today than it was in the past? Well, like I said, there's a strange sort of dichotomy around it because, you know, in one sense,

it has created opportunities for people that are outside the system to, to self-produce and self-release, self-distribute their work. But what's happened during that whole process is that the consumer trends and behaviors have changed so dramatically that it's become almost impossible to make a living just from recorded music itself. And if you look at the numbers and why this is one of the points we try to make

about why the monthly subscription model is terrible, is that if you look at it, it's about, as an independent artist, this is not even on a label, your fans would have to stream a song on Spotify at least 150 times in order to equal the cost of a download. So there was this brief period of time when iTunes took off and we had digital downloads as the alternative, like here was the good alternative to needing to go out and buy CDs. But then as consumer behavior started to really dramatically change, there was this moment at which the technology around streaming had also gotten robust enough to be able to deliver a product

that could actually function really well. But it seems that my first, impression of it is that the industry kind of jumped onto it, jumped onto that bang wagon because they were really desperate to find an alternative to piracy and torrents and stuff. And so they just kind of went for it. And because they were going to get an ownership stake in Spotify immediately, and they had that hope of an IPO down the road, I think it seems like nobody really kind of looked at the business model. And the notion that you have to listen to the same song 150 times to equal the price of a download.

It's just it's a bad business model. It's almost impossible to make a living from recorded music. Is what you're saying here, the problem is that Spotify is just too cheap? I think it's yes and no because a big part of the issue is that it's the all you can eat model. this notion that you can somehow fairly renumerate people when you've got some folks that listen a half hour a day and some people that have it on six hours a day. And so there's these wildly different listening habits. And but there's just, you know, it doesn't, I don't think there's any way to reconcile the math to pay people fairly.

So that's part of the issue. And then it's that, like I said, this notion that somehow just having access and occasionally listening, it's not really a dependable income stream. Because you have to really get hardcore, you have to convert people into hardcore fans in order for it to even get close to the kind of money that artists used to make off of physical goods. So you mentioned that you would need the users to stream a particular piece of music 150 times to make the same amount of money that you would make if there was a download. So how do I interpret that statement?

That means suppose I sell a song over download, I might make a dollar. And if I stream, then I need, then if one user streams, then I make $1.1.5. by 150 on that song, is it? Yeah, approximately. Yeah, I mean, the numbers are slightly different, but it's, yeah, it's basically that. So Peter, can you tell us a story of how you started Resonite? So Resonate kind of began out of a bigger issue of looking at the new decentralized technologies like Ethereum and Arts distribution, because that was the real vision that I had of

where the internet was going to go back in the 90s. And I think that's what a lot of us that were around since then, we really saw the possibility that the internet was going to create this new distribution method. But then what happened is that we got all these silos, right? You know, we got Amazon, Facebook, Google, and Apple kind of controlling most of the traffic. And so when I had found out about the Ethereum campaign and looked into that, I realized like, oh, wow, maybe here's a technology.

that could help disrupt all of that. And so I was very curious about looking at some ways of combining, like, arts and creative and cultural distribution through a decentralized system like this. And the initial ideas were, like, really much too large and much too complicated. And so I decided to focus on one thing and kind of narrowed down into something really specific.

And that was music because it was something I cared about. and had been a part of for most of my life. So, yeah, it's been an incredible journey since then because I got to learn a tremendous amount about the way things, the way the industry works and the way the technology works. And I'm still very helpful that this is going to lead us to kind of a whole new paradigm.

So in your website, I read that you are pioneering this new streaming model that you call stream to own. can you tell us what that is and how it differs from the streaming models used in other places in the industry? Yeah. So where that came about was part of it was just like I had a burst of inspiration because I was listening to the same two albums on Spotify and realized that I was essentially renting these albums. And I knew what the per stream rates were. So I knew that they were really getting that much money and I was getting no closer to owning it. And then if I still wanted to go out and buy the CD, I'd have to then pay for the CD on top of already paying for the streaming.

And that's when the inspiration struck. And so I immediately pulled out a calculator because I figured out that like if you gradually come to own something, the more that you listen to it, you could probably break that down and into an interesting pattern. And I thought, well, geez, maybe you could take a dollar and, you know, being a fan of the big. Beatles, I went for number nine, number nine, just for the fun of it, and found that there was an interesting pattern that you could start at 0.002 and double it, and it got just over a dollar. And so that's, that was kind of the, the birth of the model. And the more that I explored it, I realized that there was, there's something, there's a few things that are built and do it. One is that, like I was talking about in terms of the problems around the existing

streaming model with a $10 subscription and the way that this money gets divvied out based on different listening patterns is that you get, there's no consistent rate. You know, even Spotify quotes on their own website that they pay 0.006 to 0.0084, you know, that there's this wild fluctuation in what their actual rates are. And so with stream to own, one of the benefits you get to this is that it's a fixed rate. You're paying based on where you are in that cycle. And so there's no like fuzzy accounting math in terms of how that gets calculated. So you get to lock those transactions into a blockchain so we can have an immutable ledger that

says that's what happened. That's what was played and that's what gets paid. but then there's a kind of deep psychology around it as well and that was the thing that I felt like ever since Napster came along that I was kind of seeking myself was what's the alternative in this era because we went from scarcity to abundance almost overnight and I feel very lucky to be old enough

to remember scarcity you know I remember like not being able to find music or that you'd have to have a certain, you know, have to have certain friends that knew about bands and a lot of stuff traveled by word or mouth if you were going to listen to anything that wasn't on top 40 radio. And so that we suddenly went from scarcity to abundance where you could get anything. And I think the key thing that was missing there was what's the real human process of becoming a fan of something? And I think that's what's the real human process of becoming a fan of something. And I think that's what we stream to own.

That's something that we achieve with this model because when you're starting out and you're just in the like the music discovery phase, you can listen to the same song four or five times. It's you're paying less than a dime. But there's a moment when you become a fan of a work and you become a fan of that artist. And that's when I think that for most people,

there's a recognition that like, wow, I really like what they're doing. I want more of this, I should probably give them some money. And I don't think there's been a mechanism on any of the existing services that has done that. There hasn't been anything that allows you to easily and seamlessly go from just checking somebody out and seeing if you like it to, wow, I'm really a hardcore fan of this band. And I want to support them financially because I want more music from them. And I think that's something that we achieve with Stream to Own.

Yeah, I think that's very interesting. point. So my wife is a writer and I've had a variety of discussions of her about the sort of pricing of books because that also seems to be something where it's just very inefficient, right? Because usually if one price is something, you try to somehow get people, you know, who value something more to pay a higher price, right? So airlines try to get people who, you know, have more money they, you know, want some more confident stuff, you know, to get them to pay. business class and then they pay a lot more. Or, you know, in a football stadiums, you know, sports, you have better seats and, you know,

there's all kinds of differentiation. But then if you have something like a book, it could be somebody who's just by the airport and going to the kiosk to buy something quickly on the plane pays like $10. But somebody who's been waiting for the next book, you know, from that author for like two years since reading the last one and can't wait to have this thing, paste the exact same amount. So that's something that's clearly inefficient because there's a lot of value that's kind of left on the table.

And I can see something similar here that maybe you're actually able to capture, capture more value from people who really value that work. Yep. That's the idea. We'll see how it works when we actually get it running. Still, though, there's an interesting. question here. I mean, if you, if as an artist, I make more money with the stream to own model, I mean, presumably that means that the listeners, they end up paying more. I mean, unless you think

that resonate as a platform will be much cheaper to operate than something like Spotify or existing platforms. So do you think that the stream to own model because of that psychology described, it will make people happy to pay more for music or is there something else that's going on here? Yeah, I mean, this is one of the big questions that we get asked a lot about the model in terms of how it's going to actually, you know, kind of work itself out when it's when it's live and it's out in the market. And we've got some infographics that show that if you're an average listener and you're mostly listening to new music, you can spend two to four dollars a month listening to a thousand

songs a month, which is the average. That's based on Spotify's average. And the real question is going to be is how many people are going to go convert to like fans of specific artists during that phase and end up spending more because they go, they like buy a couple of tracks and maybe that goes up to five or six or seven dollars. So there's going to be a lot of gray area. Certainly, the heavy users, I think, could have an issue and it could end up spending more. But where that might be okay is when you look at like the upper end of the scale, and those are the people that spend higher than average amounts on music that are still going up and buying CDs or they'll buy it.

They'll stream something and then buy the download. they may represent the folks that are at the higher end of the consumption pattern and that when we see maybe more mainstream that they want to do something like set a cap at $5 or $6 a month and not go over it. So there's going to be a lot of questions that we'll be kind of answering once we get it out and introduce it to our community and start playing with it. but I do think that it has a possibility to I mean it certainly puts the issues back out

and says well you know here's a different model and this is about supporting artists so you can you can do that or you can go buy at the sweatshop so we'll see how that plays out yeah now let's move on to the technical part how does what does resonate as a platform look like

What kind of technologies do you use and what's the overall architecture? Yeah, so at the moment, streaming is pretty straightforward. It's not, you know, there's nothing really new or sexy about that core functionality. Where things do get very interesting, though, is in the blockchain. And for us, that's going to be about a couple of different things. one is the metadata is to be able to put content into a blockchain so that that information could be used by other parties or could be ported off into different apps or used by different startups or maybe it could go to Shazam or Wikipedia or whatever and so by having the metadata in a blockchain you've got a lot of benefits there for artists it's also like about securing copyright and stuff like that And then the transactions, like I mentioned before, to be able to create that immutable ledger saying,

this is what was streamed on our platform and this is what gets paid for it. So that's where things are interesting. And I think also there's going to be something around storage and distribution. There's definitely some hope that things like IPFS or storage or storage A, I'm really not sure how they're officially pronounced. Storage, yeah. That they could be an interesting alternative that could, like you mentioned, really drive the cost down.

Storage certainly is advertising that, that they're saying half the price of Amazon S3, and that could be a big cost savings. And I think it's really cool, too, that it's kind of going back to Torrent in a way and that you're seeding files as listeners as fans, but you're doing it in an ethical way that's not about stealing content.

So we'll see. I think that's going to take some time this year for that stuff to mature. But where it really gets interesting down the road is when we can fully evolve this into a DAO. And that's what I seriously hope will evolve into. And that's why the cooperative business structure is so important that I think we do have the possibility that once somebody actually figures

out how to make a DAW work, that we could apply that technology to the community where it could really become self-sufficient and self-sustaining and maybe not even really need an administration in a traditional sense. Yes, I can definitely see that, right? If one thinks of resonate as an organization that's owned by the artists, and where they can kind of vote on what happens and there's visibility on how payments get routed and usage gets tracked.

But I guess at the moment, there would still be, I mean, payments would be, I would sign up with a credit card, it would go to the cooperative, and then you would, how would those payments go to the artists? And is there a blockchain component in that? Definitely in terms of recording the transactions.

If any artist wants to sign up or link an account to their Bitcoin account, we could do more instant and more frequent payments that way for sure. But the majority people for a while are going to be on Fiat. So we'll have to do the normal things like do payouts at a certain amount. Like I would say reach a $20 balance or something to be able to withdraw. just to deal with transaction costs. But I mean, I think even there, I mean, there's so many startups coming on that I'm sure you know that are doing stuff with international currencies and trying to route money more efficiently so that, you know, if we can get away from this 3 to 4% surcharges that happen, then we'd be in good shape to be able to make that a bit more automatic. But that's going to take a little time to develop. You mentioned before that you guys went with Big ChainDB.

Can you run us through how you're using Big ChainDB? And what were the criteria that you used to make that choice? So that decision kind of came about very organically, partly from just interacting with them, being in Berlin, and being at the same conferences and having lots of conversations with their developers and, you know, Trent and Greg and stuff. And, but I think there was also a lot of it came from seeing what else was going on in the space. And, you know, there's certainly like the most well-known project at the moment is Benjiujo-Hodger's dot blockchain.

And it just seemed like it was overly ambitious to try to do that they're sort of doing everything all at once from the very beginning. And I thought that was a big problem or a big mistake because the huge thing around content with blockchain, of course, is identity. I often explained artists who don't really know too much about the way the stuff works. I say that, you know, if you lose your keys to your Bitcoin wallet, you're losing access to your money. You know, It's sort of like that if you lose your keys, you don't just lose your ability to get back into your house. It's like your house disappears.

And what's even worse than that is that there's like an automatic beacon inside that house that's sending out transactions around the world. So you're never going to get back in. You're never going to shut it down. If you were to try to kind of look at the way Bitcoin functions when it comes to identity and try to overlay that against dealing with content and licensing and payments and stuff. You know, it could be very, very dangerous if musicians don't keep track of their access. So projects like Dot blockchain and others that were trying to solve that identity problem in the short term,

I thought that was kind of going to create some problems because it's going to take some time to get there. So that immediately kind of set the tone to be like, okay, so if we strip that out, what are we left with? When we're left with is that we're going to have a massive amount of data because that's what streaming is going to do. It's going to generate an incredible amount of data. And at the most fundamental, you need metadata. You want to put metadata into a blockchain because that's the huge problem in the industry,

is that there are multiple databases and they're often inconsistent. And so by having a single point of truth that this is, what identifies what a track is. You can solve a whole lot of problems with that. And you just kind of just strip it down to that. And so I was looking at that and thinking, well, what's out there that could do it? It was really clear to me that the really, the two alternatives were media chain or big chain. And I think just being in Berlin, you know, it put me in regular contact with big chain folks. So that's kind of where that ended up. Then there was another step that occurred in that whole process and the evolution of that thinking

was that they started to work with, they were part of the Kuala IP working group. And the Kuala IP thing is tremendous in terms of really being the framework for dealing with music licensing and creative works and derivative works and all that. So the fact that they're baking that into the core of their tech is fundamental. Let's take a short break to talk about Jax. Jacks is a multi-coin wallet created by the people at the Central. Now, in the past, if he had a whole bunch of cryptocurrencies, it was a pain to handle them. You either had to leave them on an exchange, which was insecure, or you had to have all these

different wallets, which was a hassle. Fortunately, now with Jacks, those medieval days of darkness, misery, and suffering are over. Jack supports multiple cryptocurrencies and new ones are being added. But it's not just storing cryptocurrencies, you can do with Jax, but you can also exchange them directly from within side the wallet thanks to their shape shift integration. And since there's only one seed, Jax makes it super easy to back up and sync to the other devices. Jax works with Windows, MacOS, Linux, Android, iOS, and has browser extensions for Firefox and Chrome. So go to Jax.io, that's J-A-W-X-I-I-O to download

the wallet and get started today. We'd like to thank Jax for the support of Epicenter. Can you tell us what Quala IP is? Yeah, so Quala IP is essentially about linked content and ownership and rights and rights transfers and things like that when it comes to creative works. And it's a schema that was developed out of the Link Content Coalition. And it is a perfect fit for the arts because, you know, especially music, because you've got complex ownership structures, you know, in terms of like, who has rights in different capacities. And so that you could create a system that recognizes those rights, allows for transfers, allows for licensing,

and that framework is the structure, what the QualiP is all about is a huge win for us to have that with Big Chain because it gets to be incredibly, incredibly complicated when you think about like producers and songwriters, performers and engineers and what have you. Publishers, collection societies, it's just, you know, there's a lot of people involved. Sometimes on a single song, you know,

there can be 50 different entities involved. And that's what a lot of what the Kuala IP solves is being able to create a framework and a structure for dealing with those ownership rights. so in the in the past i think two years there's a there has been this this movement in the blockchain technology community about a attribute at like solving attribution of content on the internet like who produced who created what content and then be figuring out a way by which content creators could be fairly compensated for their work.

And specifically in the music field, there's a project called Ujo Music that's trying to do something similar. And we're wondering, like, what is exactly the difference between your approach and what Ujo music is trying to do? Yeah, so Ujo is very well known because they did the first prototype of music on a blockchain. chain, the first really kind of project that got a lot of exposure. I think maybe peer tracks or bit tracks or something like that. Maybe those started first, but because Ujo was able to use a song from Image and Heap,

they got a lot of exposure. And then they kind of made a pause and to take a look at, you know, how this was actually going to play out because the Ujo experiment was kind of limited in the sense it was really just a consumer-facing app for, you know, making a payment on a song with ether. But it wasn't about, like, infrastructure. And I think where they're at now is looking at profiles and the identity part that I mentioned a minute ago. And so I'm actually going to be talking to those guys later this week and hoping to see if we can align our efforts to, you know, to not be kind of both inventing the same wheel.

And if they really focus on identity, which makes a lot of sense because they've got, you know, consensus has a U-Port. And that's one of the main driving things at consensus. Then I think that their creation of an artist identity pod or module or something, if you will, could be tremendous.

And it could be beneficial to both resonate as well as lots of other players in the industry because that's like that's the hardest thing, the identity on the blockchain is just a mess. And if they can solve that, then I think it could really be tremendous. Peter, you know, it seems like resonate, right? It's really about giving content producers, musicians, a way to, you know, put out their tracks, sell them directly, monetize them, and, you know, make a better living out of that. But one of the realities of the music business is that you have the traditional

labels that have enormous power. And, you know, we're here in Berlin and in Berlin there is a startup that probably many know, actually we use it with Epicenter called SoundCloud. And they have raised almost $200 million and, you know, essentially to try to create a new, you know, way for artists to sell music. And yet at this point, they don't seem to be doing well, right? They don't have a business model the labels essentially it would be able to sue them and shut them down so how do you think about that do you think that success for resonate will involve um onboarding labels or working with them to some extent or do you have more the stance that one just needs to build something completely separate completely apart and you know kind of start afresh well i think one of the key things that

you said there was the lack of the business model, and I think that was the thing that happened with SoundCloud. And they, you know, they took, they had a real similar trajectory to lots of other startups in the 2000s, which was that it was all about creating an incredible product, building up a user base, and then figuring out the business model later. and they weren't the only ones that kind of had that trajectory. And they solved an amazing, they solved a problem in a really amazing way in the mid-2000s, because everybody needed, and all the producers really needed a way to make a portable player and to be able to stick it anywhere on the web. And so it was a huge success because they solved a fundamental problem. But, you know, there wasn't a, unfortunately, there wasn't a business model attached to it.

And, you know, a lot of the money came in and said, we'll figure it out later. But then along comes Spotify. And so then it seemed like they had to sort of try to force that model onto their, their community and it's just not the right match in a lot of different ways. So I think that's, we've got a lot of reasons to be optimistic that we are starting off from the very beginning with a distinct business model. And we're also, you know, in some ways may not be entirely popular in the sense that like one of the big problems in SoundCloud has had is that is over takedowns

because the way the community started off in the beginning was that it was really popular for DJs to put up mixes. But the longer that that went on, the more problems they ran up against the major labels, and then they started to have to build in all of these technologies to do automatic takedowns, which has been extremely contentious in the community. You know, for Resonate,

we're starting off with only allowing artists to upload completely original works, not even cover songs in the beginning. And that's to try to not repeat that same kind of process again. It will be interesting to see if that works for everybody. I think there's certainly some subcultures that believe that you should just be able to do anything you want online with content regardless of where it came from. and so we'll see how that plays out if everyone's willing to kind of adopt this new model that's about ultimately it's about fairness and making sure that everyone that's involved gets their credit

and gets their payment if they want it so that answered all of your questions sure sure today's magic word is cooperative that's C-O-O-P-E-R-A-T-I-B-E head over to let's talkbitcon.com to sign in into the magic word and claim your part of the listener reward. So one more thing that I think differentiates resonate is the cooperative structure that you are pioneering, right? So can you give us a brief walkthrough about what is this cooperative structure and why you chose it? So, yeah, I mean, I think that the two sort of major influences that came into play. when I came to that decision was looking at the decentralized text of blockchains itself because, as I often say, decentralized technology without decentralized economy is ultimately

meaningless. It's kind of pointless to have one without the other. And so when I was just kind of brainstorming around that, I thought, well, actually, the closest business structure we've got to that is the co-op model. So that seemed to make a lot of sense. And then it was also just that I've been around with web startups and sites for such a long time. It was on the periphery of a lot of stuff and had a startup previously here in Berlin. And so I've spent a lot of time looking at what's gone on and what's happened.

And I think the big problem with tech, of course, is that you need money to develop. And depending where that money comes from, the money that helps you develop is often going to dictate how you operate, just to put it as simply as possible. And so I wanted to see, you know, if we're really going to do this and make sure that doesn't get corrupted like other services have in the past, that the co-op structure was the way to go because it's about, Democratic ownership, Democratic controls. So it's going to be really interesting to see how this kind of plays out now that we're in, dare I see it, the Trump era. I think this is going to become like the most, if anybody's watching, this is going to become like the most used expression, the screen,

the most used emoticon. Yeah, so anyway, what I met by that was that, we'll see if, you know, as we kind of are kind of confronted daily with this, this, probably the most corrupt regime that's ever existed in the history of the human race. But if, you know, that really kind of drives some yearning for the alternative. And I believe that co-op structure is the way to go. Yeah, I mean, the idea of a co-op and blockchain, of course, is not a new one. I know there's been a few projects, a bunch of interest in that. One of them, which we've had on ages ago, years ago,

was a project called Swarm with Joel Dietz. So they were sort of a crowdfunding platform for crypto projects. And one of the things they founded was a co-working space in Brooklyn that was sort of cryptocurrency driven, and that was also organized as a cooperative structure. I know there's been a bunch of people sort of looking at that. It's great to hear that you're taking that forward because I agree.

I think it can be a very nice fit with a decentralized model, and especially when it's about fairness and it has goals that are kind of different from just maximizing revenues for the owners, then it could be a really nice fit. Yeah. So just briefly, I mean, with Big Chain B, right, there's still the question, you know, who runs the blockchain,

who operates the blockchain? Would that be also members of the co-op? Or how is the control structure on the technical level organized? I think it's going to take years before we'd be in a position for members of the community to host the blockchain itself, because I think the data. sizes is going to be too large. You just look at Bitcoin. What are they at now?

100 plus gigabyte. You know, for the music world, that's just, you know, music consumers, it's just ridiculous. And I think that there's a possibility that the resonate blockchain when it comes to metadata and recording transactions and content and everything else is going to be many, many times, any exponentially larger, we'll just say. But I am confident that big chain has a good model through IPDB to start off with this federated distribution model to reconcile that problem that, you know, we're talking about really massive data sets.

So not everybody's going to be able to host that. But let's look at what kind of structure can we put into place that's going to make sure that it can't be corrupted in the same way that Bitcoin can't be corrupted. And I think they've put a lot of thought into that. And I'm very confident in the team there that they're going to be able to guide that in the right direction. So I think it really is, you know, just time will tell. I mean, we are talking about something that's very, very bleeding edge.

Yeah, okay. So you guys would be using IPDB, which is sort of a public version of big chain DB. Yeah, that's also operated by a foundation, which is kind of like a corporate, a little bit like a cooperative. Yeah, I mean, at least it says that the ownership structure is fixed and it can't be diluted. It can't be controlled or taken over. And that's super important. Now, you guys are running, I think you call it a crowd-owning campaign, although most probably would think of it as a, like a crowd funding campaign or like you guys are raising money, right?

So can you run us through what that looks like, you know, what do you guys are raising money for and how you are going about it? Yeah, so it's a crowd-owning campaign because if you participate, you become an owner. The minimum is $5 or $5 or $5, and that's the membership as a listener to the co-op. As a musician, if you're supplying music to the platform, that that's what earns your share. So musicians don't actually have to do that.

It's really just for listeners. But then we have the possibility of having investor shares or very, very soon, maybe when this podcast is live, that language is going to change to supporter shares because it kind of fits a bit more with what the co-op model is about. We can get into details about what that means. But, yeah, I mean, The notion that it's a crowd-owning campaign is really kind of, in a way, it's for marketing purposes.

It kind of get people excited about it. But the reality is that there's no real end date to that at all because for the life of the project, anybody can become a member and anyone can buy shares, buy additional shares, because that's going to be an ongoing part of the way that the cooperative will have to function. So it's a crowd campaign for kind of for marketing purposes, but really this is a fundamentally different model, which is about the ability for the crowd to support a project that has, you know, a long right ahead,

and that just has a completely different concept behind it. So it's not like pre-ordering a product that gets shipped, six months to a year after you, you know, you put down your 30 bucks. This is a bit of a different. And the exciting thing about this is that it's coming to fruition rather fast. We started the campaign three months ago, and we're very close to actually releasing something for our members. It's a little bit under wraps as to what that is. But, yeah, we're pretty close to putting something out.

So this cooperative model combined with the crowd ownership, and you said in your website you say one person, one vote, one share. So does that mean like even you get like one vote for having come up with that idea and build the cooperative in the first place? Yep. That means I could be voted out of my job and I will walk away with nothing. I don't, yeah, this isn't like your normal startup where the founder has 100,000 chairs and is rich on paper. This is a totally different paradigm.

Tell me like how you're going to recruit developers to build this cooperative model. So you might be fine with that kind of arrangement where suppose I go to the website today and I put in $5, I have the same ownership stake in the cooperative that you have and you have spent like, let's say, at least a year of your life doing this thing. Now, you're going around recruiting somebody else and you're asking them to put two or three years of their life building this thing. How are you going to incentivize them if those guys are going to get the same number of shares as I am? And I just spent five minutes on the website.

The ownership share is mostly about voting. and the ability to participate. And we have a voting structure and a profit structure that's very similar to most other worker consumer co-ops. And how that breaks down is that we have two kind of classes. You have the worker class and the consumer class. Consumers are the listeners. The worker is two groups, and that's the musicians

who are supplying the content. And the other one is the people who are building. it. So if we hit a point where we get enough investment coming in to where people can go on salary from the investor shares or supporter shares, then the people who have been volunteering on building the platform will then, you know, just have a job. But if we have more of like a slow growth model where it's really based on volunteer effort, then as workers in the platform, they get to share in profit distributions. And so we have a profit distribution block that goes strictly to people to build it.

So it's not necessarily that your one share means that you can't ever possibly make money because through profit distributions that option does exist. I'm still curious, though, how the economics here work exactly. So let's assume that Resonet is going to be a huge success. you guys, you know, let's just say that through 200,000 people become members, so you guys raise 1 million or something like that through those member, member the fee, the membership fee. And now it's going to, and somehow that's enough to build the platform, right?

And now it's starting to make a lot of money. I mean, how does that then work? Do, does that mean the member share could increase in, value and now instead of it costing five euros it costs a hundred euros because you know that the payouts from the profits is so high that the value of those shares has increased a lot or how would that mechanics work here it's possible that it'll change it a little bit but the the value of the member share isn't necessarily tied to the overall success and profitability of the company and if you If you go to our site, there's a section of diagrams that shows some charts that explains

how the profit distributions work. So in your example of if we've got 200,000 members and that reaches a million revenue, what that does is, or not a million revenue, but a million to support the development, that could cover most of our developer costs and then allow us to kind of have stability, as an organization to, you know, acquire more members and more talent, et cetera, et cetera. But it's really in the profit distribution that the value is then created. And so if you go and take a look at the site and take a look at some of the charts, you can see how that all breaks down.

But basically for, let's say that we end up with a million in profit at the end of a particular year, it's 45, 35, 20 is the split. So 45% of those profits would be 450,000 would be distributed among the musicians, 350 among the fans, and then the rest going to the volunteer community that's building the system. Sorry, my goal is like thrashing my throat a little bit. And so we split those up. based on consumption patterns. And so like if you're a huge artist and you've got like a million streams and downloads,

you're going to get a higher percentage of profits. You know, if you as a consumer, you spend $200 a year, you're going to get a higher percentage in dividends than someone who spends $10 a year. And that's totally typical and normal among worker consumer co-ops. I was a member of one called REI in Seattle years ago. I spent 800 bucks in the store, and when I got my distributions, they gave me the option to either cash out or go back to the store and spend those earnings on something else.

And I think with Resonate, we'll see a lot of musicians, or a lot of listeners, rather, that will do that. they'll take their profits in more streams. And that's one of the great things about the models that it kind of can help recirculate some of those profits back into the musicians. So I think it really remains to be seeing kind of like what the consumption patterns are at that level of users and what the costs are. I mean, we've got a lot of projections and charts and graphs around, you know,

how much is this going to take to operate and all that, but we weren't really know until we're actually running. So there's a lot of questions there. But that's where it's really cool that it's a co-op, is that if anyone wants to take a look at the interworking, they can. You know, we're not going to be secretive, like other services out there that hide their contracts.

We're going to be open and transparent about everything that goes on here. Yeah. And so people want to get involved. of course we'll link to the crowd-owning campaign and to the other resources, but is there any particular help or support or involvement or type of people that you're looking for and that you're kind of wanting to join the effort?

Well, we're always in need of developers. At the moment, we've been very, very lucky to have some folks that have been able to put in some some time without salary for quite a while. But we're, you know, always use more our code support. There's a lot to be done. Of course, spreading the word too is really important. Just, you know, passing it on and letting people know.

For musicians, getting them to sign up and create a profile and maybe upload a couple of tracks to showcase on their profiles, can really help a lot. So there are a lot of different ways to get involved. There's a lot of info on the site about how you can do so. And I think it really, it's going to kind of come down. I think, you know, to kind of circle back to that whole political thing at the moment is that I think that we may be at the cusp of a sea change in the way that folks look at things like this.

And I think that's ultimately the, the answers to whether resonate is going to succeed or not, is if people really want a different world, if they want a different model, because things are getting crazy out there, as we see in the news, every single day now. And I think that's what we're presenting is a different way forward.

So, you know, just by way of comparison, Spotify spends $2 million a month, on advertising. So I don't know if a co-op model can compete against that, against the VC model. But if you look at the fact that Spotify is essentially not in business to make money on music, they're in business to build a network and have an IPO. You just have to ask yourself, like, who's benefiting from this? Are the people benefiting or a handful of investors?

and some CEOs at some major labels. So whether Resonate succeeds in the long term, I think, is really going to depend on some of these kind of bigger, broader societal issues because it's all connected in a lot of ways about, you know, do we want to own the platforms that we use? Or do we want to just, you know, use free shit, the data mines the crap out of us, and then makes a handful of people insanely maddeningly rich.

Yeah, I know. I mean, I think there's no question, right, that the whole monetizing of content or so many of those, the internet infrastructure in a way has become very centralized and different approaches are needed. And I think music and content is a great example of that. So I'm really excited about what you're building and the kind of vision you're pursuing. And I just wanted to point out, because people may be. weren't, you know, just listening to this, they wouldn't be able to be aware of that. But the website is really fantastic. And I think there's so much great blog posts and background information and infographics there

that's really exploring and explaining all of the different aspects of Resonator. I was really impressed. And I can really see that, you know, somebody has been thinking about this problem for years and somebody has been putting a lot of work, you know, people, I've been putting a lot of work into all different aspects. So I think that really shows. And so I think that would be very interesting for people to check that out. Yeah.

There's tens of thousands of hours involved in where it's at at the moment. And a lot of people that have contributed to making that happen. And it's been really, really inspiring to have started with an idea, you know, in its most raw form to see it developed to the this degree to see so many people respond to it. We've got, I don't know what the exact count is, but over 850 musicians and over 120 labels, indie labels, that have signed up. So it's really exciting to see the interest. And just hopefully we can keep it going. Yeah. Well, thanks so much for coming on, Peter. Yeah, we'll have, of course, links to lots that we talked about here in the show notes. want to check that out, you know, they'll know where to go. And yeah, thanks so much.

Thank you for having me. So EpiSan is part of the Let's TalkBicron Network. You can find this show and other shows on Let's TalkBiccon.com. And of course, if you like the show and if you want to support us, the best thing you could do is leave a review on one of those centralized platforms like iTunes. So that helps new people find this show. So thanks so much and we look forward to being back next week.