Unchained - How Crypto Streaming Service Audius Hit Six Million Monthly Active Users - Ep.270

Starting point is 00:00:00 Hi, everyone. Welcome to Unchained, your no-hype resource for all things Crypto. I'm your host, Laura Shin, a journalist with over two decades of experience. I started covering crypto six years ago, and as a senior editor at Forbes, was the first mainstream media reporter to cover cryptocurrency full-time. This is the September 7th, 2021 episode of Unchained. My book, The Cryptopians, Idealism, Greed, lies, and the making of the first big cryptocurrency craze is available for pre-order on Amazon. Barnes & Noble, Bookshop.org, or any of your other favorite bookstores. Go to bitly slash cryptopians. That's b-it.ly-l-l-Y-S-C-R-Y, P-T-O-P-I-N-S, and you can pre-order there today. Ledger is the secure gateway to buy, exchange, and grow your crypto. No need to use different platforms to manage and secure your crypto. You have one place for all your crypto needs.

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Starting point is 00:01:28 verified volume data, crypto asset reference data, and token and blockchain event tracking. Learn more at digital asset research.com. Today's guest is Roneal Rundberg, co-founder and CEO of Audius. Welcome, Roeniel. Hey, Laura. Thanks so much for having me. Audius has made some headlines recently, having recently scored a deal to enable artists to directly upload their music to TikTok's sound kit. But before we get into all the details on that, let's start at the beginning. What is Audius? Audius is a digital streaming service that connects fans directly with artists and exclusive new music. And we really see that direct piece of the

Starting point is 00:02:11 equation being the key differentiator here. But when you use Audius, it looks and feels like any other music player, right? You can sign up, make an account, follow your favorite artists and start listening to their tracks without knowing anything about crypto, anything else. But of course, under the hood, the way that Audius operates couldn't be more different from the traditional kind of SoundCloud or Spotify or something like that, right? There's a network of third-party node operators, artists, and fans that together collectively and collaboratively run this network for the benefit of the community and for their own benefit, I guess, too, in the case of the node operators.

Starting point is 00:02:56 And what problem is Audius solving that other music platforms have not? Yeah, so in, you know, I guess really where the initial inspiration for Audius came from was my co-founder Forrest and I are just big dance music fans, right? That was like, we're not native to the music industry or from the music industry, but we were native to crypto a little bit. So he and I started mining light coin and Dogecoin and some of the other S-cript coins in 2013 or so onward. And we just started to see, I guess, in really around 2014, 2015, a lot of our favorite artists choosing to leave SoundCloud or getting kicked off of SoundCloud in some cases. And all this great music that, you know, we had favored it and followed over the year started disappearing.

Starting point is 00:03:46 So when we started to ask ourselves, like, why that was happening was really when we started, started to understand, you know, this broader set of issues that at its core, I would summarize as artists don't know who their fans are, where their fans are, or have any ability to, like, engage or interact directly with them. Like on Spotify, for example, you as an artist can message your fans once per year. There's a specific, like, email template that you have to follow. Spotify exercises some editorial control over it. And that's it. That's like your ability to reach your fans.

Starting point is 00:04:27 So, you know, you can't like link them out to a third-party merch store, for example. You can't do, you know, just very much at all with that fan base. So we, we, you know, and there were all these downstream effects of artists just not controlling or having any ownership of their distribution, which included, you know, them getting de-platformed, them, you know, choosing to, to depart platforms like SoundCloud and Mass. So, yeah, that's really the core problem we're solving is to give artists control and access to those relationships that they have with their fans. And so how do you do that on audience?

Starting point is 00:05:11 Yeah, so it's really by decentralizing that whole stack and tool chain. So, Even the question of like, what is audience is not a simple one to answer just because it doesn't cleanly fit into the bucket of like, oh, it's a, you know, a so-called DSP in music parlance or a digital service provider. It's also not a distributor per se. It's not, it kind of has aspects of a number of these things. But what it really looks like is a set of tools that allow an artist to build an audience. and engage directly with them with no intermediaries, right? Our company or any company included, right? Like for the first time, there's zero parties intermediating that interaction. And it's led to, like, a lot of really neat emergent behavior within the network that, like,

Starting point is 00:06:06 we haven't really seen before in other music streaming services networks. But yeah, it really does come down to us being decentralized. That's why even. to launch like the first version of Audius in late 2019 which was, it was not economically incentivized. It was a test net, but it was decentralized

Starting point is 00:06:28 from day one. And that was what and fully open source. So that was what I think, you know, among the artist community allowed this audience network to start to build trust with them, right? That, you know, the rules aren't going to change on them. This API that their whole

Starting point is 00:06:46 workflow is dependent on is not going to get pulled out from under them, all of all of these sort of qualities that that just had never been possible in music before. And do you have examples of what they are doing on the platform that they can't do on something like a Spotify? Yeah. So one of the coolest, you know, emergent behaviors that, you know, our community ended up deciding to double down on with some more product features is this remix competition feature. So it was actually an artist named Lido was the first one to kind of like create this behavior, but he uploaded a track and then uploaded all the constituent little pieces of audio that went into creating that track as separate tracks that he

Starting point is 00:07:35 flagged as downloadable. So anyone could go download that raw audio. And then he went and posted on Instagram and told his fan base, hey, if you all remix this track using those stems that I uploaded and tag your track with just the, you know, like hashtag, I forget exactly what he did. I think it was like the name of the track or something. He could then go search that hashtag, find everything that remixed it. And then he did a Twitch stream like going through and listening to them live and giving feedback and then engaging. So it was really, really fun. And we were like, this is so cool. Like there has to be a way to kind of better enable that.

Starting point is 00:08:19 So we kind of built out like a little bit of UI for this. And then RAC, I think, was the next one that ran a remakes competition with this. But now there's actually there, by that time, there's actually a way to formally tag a track as being a remix of another track. And he actually ended up signing, I think, five of the tracks that. it remixed his track to like an official release under his label. So these were like just, you know, fans of his that like loved, uh, you know, Andre's music or RAC's music and, uh, wanted to like,

Starting point is 00:08:54 you know, just get noticed by like their favorite artist, right? And, you know, some of them actually are now on, on an official release of his, which is like so cool, right? So, you know, when you break down all of those kind of, I guess like the barriers that exist between artist and fan, it finally, you know, it starts to become possible to just do these like weird neat things, right? That like had never,

Starting point is 00:09:16 another example that comes to mind is we, we've seen a few artists upload like works in progress of a given track. So they'll like upload a, you know, draft, get feedback on it from the community, iterate on it, upload a new one, see how people like it, do that a few times. And then the final release like two or three months later, maybe makes it to a Spotify or two other.

Starting point is 00:09:41 other services. But the super fans that are like, I want to hear everything this person makes and like I want to engage with it and hang out. There's no better place to be right now. Wow. I love this. It sounds so cool. I mean, it just sounds really fun. It's like a little DJ mixing party on the internet or something. So something that's interesting to me about your platform is at this moment in time, I feel like people typically think of anything that brings together culture and crypto as involving NFTs. And that's actually not the main way you're using blockchain technology. At least I believe so based on my research. So talk a little bit more about the crypto aspects of Audius. Totally. No, you're spot on there. The only integration of

Starting point is 00:10:35 NFTs today and Audius is as an artist, you can run like a little storefront page on your profile if you'd like to. So some artists like Blow or RAC have these collectibles tabs that they've turned on on their profile and they just put all the NFTs they've minted and that they've owned there. So it's kind of like this directory that links out to, you know, whatever market might exist in that like on OpenC or Super Rare or wherever it may be. But yeah, no, we, we aren't, you know, a native NFT platform by any means. What Audius uses, you know, blockchains plural for, and I can get into like more, more of the technical detail around that is effectively a coordination layer for this network. So there are these off-chain nodes that host content,

Starting point is 00:11:30 host metadata and kind of do the work that is required to keep the network functional and alive, right? Like, you know, the way that the network is set up our company could go away tomorrow and, you know, the vast majority of votes here would continue to work just fine, right? It's because it's being operated by the community, but there's what the kind of, you know, Ethereum at the center on the node operator side and then Solana on the, the content engagement side provide are this sort of like unified source of truth for a number of questions, right? Like who are the nodes on the network?

Starting point is 00:12:10 Are they in a healthier valid state? And then on the content side, like, what is all the content in this network? Who has engaged with it? Who has the ability to update or modify it? So by doing that, we can kind of like anchor trust with these small pieces of data on chain that refer out to data being stored off chain on. on these community-operated nodes. Okay.

Starting point is 00:12:33 And so for the metadata, it's just like kind of, you know, who wrote this track or who performed it. And does that include kind of like royalties, the way that, you know, a Spotify will pay you for streams. So it's every time it gets played, then like different people who participate in that song will get paid? Or how does that work?

Starting point is 00:12:56 Yeah. So it includes everything from, you know, the title of the track and the cover art for the track and, you know, the name of the artist and things like that to things like revenue splits as well. So the network doesn't natively split revenue today, although it does allow you to like define those splits within the metadata because that's something that, you know, I think our community had always planned or wanted to build towards over time, right? Yeah, like even in the absence of that, like there is quite a bit of like content that, you know, both independent labels have uploaded and a few of the larger players have have uploaded.

Starting point is 00:13:41 And basically they handle the splits on on their end right now. So, you know, there's one address that's getting paid out royalties. And then, you know, that company can decide, hey, oh, I need to split this however I do or what have you. So so yeah, on the metadata side, it's really more just like, you know, all the things that go around the audio file itself to make it have meaning or, you know, make it interesting. And then you also have the audio token. So what functions does that perform in the audio system? Yeah, that has three core functions. It secures the network. So the people who run the nodes that actually do all the work that makes the network functional, they stake the token to to be able to. run that node and then they earn fees back from the network proportional to

Starting point is 00:14:33 the size of the stake and the number of nodes that they run. So one of the kind of strange things about the audience networks needs compared to like a lot of, say, layer one blockchains that have their own nodes is that the need for storage grows forever, right? Like the more people upload, the more people engage, the more you need. So the way that the node infrastructure is set up, it's not like there's a fixed kind of processing capacity. It's like the more nodes there are, the more can be stored, the more can be served, et cetera. So like the crypto economic structure has to kind of like, you know, incentivize a much larger amount of storage to be on the network than the network actually needs at any given time.

Starting point is 00:15:20 So anyway, yeah, so secures the network. The token also is used in governance. So from the time the token launched in October of 2020, our team was no longer capable of making any changes to the code that powers audience. Both all the on-chain smart contracts for engaging with content and all that good stuff, as well as in the off-chain node software. So the nodes actually monitor one another to see that they're running like the most up-to-date version and they can get slashed if they're running too far behind and things like that. But to actually accept within the network a new version of the code as being like canonically correct, there has to be a governance vote that happens. So it's actually it's not one token, one vote, but one token staked within the network is, is, you know, able to vote. So if you just hold tokens passively, you're not able to participate.

Starting point is 00:16:21 But if you're delegating to a node or you're running a node yourself, you get to vote on how this goes. And then the third pillar there is feature access. So as an artist, you actually, if you hold and stake some number of tokens, you get access to additional distribution features that may consume more resources to the network level. So the NFT feature is actually one of those. So if you hold more than 100 audio tokens on your audience account, you're able to set up that collectibles tab and connect, or sorry, connect external wallets and stuff. The reason for that limitation actually is that it costs the network resources to go index all those wallets and keep, you know, basically keep track of all the changes to any holding of NFTs or things like that they have. So, yeah, those are the three primary functions. I think the one misconception that I always like to clear up around this, though,

Starting point is 00:17:22 is the audio token is not used for payments within the network, right? So users aren't purchasing this to consume content or things like that. We actually, you know, we talked to many, many, many artists about this as we were kind of, you know, working through the test net. And, you know, artists want food. shelter, right? They don't necessarily want, like when they, they are charging for access to their music, conflating, like, control of the means of distribution with, like, their basal needs to, like, function as a human being in the world, I think, you know, is a very dangerous sort of game, right?

Starting point is 00:18:03 We tried to, you know, based on all of that feedback, I think our, you know, the intent with a lot of that design was to separate these things, right? to say your ability to control your distribution should not come in direct conflict with your ability to feed yourself and support yourself, right? And mixing them creates some kind of weird dynamics, right? Where are the artists that, you know, are, say, selling what they earn to, you know, support themselves, that means they're losing control of the distribution that they're making valuable. right, which is not the, you know, we felt not the right sort of incentive structure to create.

Starting point is 00:18:47 So then are they earning stable coins? Monetization in Audius is not fully live right now. So there are folks that are earning in stable coins in like very ad hoc ways. So like on Audius, every user has a wallet. They're able to, you know, receive anything to that wallet they might please. So there's kind of this like ad hoc economy that's that's emerged around that. Um, just because there, there are so many people now on, on the network that have, uh, these wallets. But, uh, no, the more formal features on monetization are, are still, I think being iterated on and worked on by the community. I think the, the first goal was, was always to build a meaningful enough audience, uh, within the network that,

Starting point is 00:19:33 like, it actually started to make sense for someone to think about monetizing it. And for the first time, I think in the last three or four months, there's some accounts on audience with tens of thousands of followers, like 20, 30, 40,000. That for the first time became enough that someone could think about, hey, if, you know, two or three or five percent of my audience might convert to a paid engagement, like a paid subscription to me or something like that. That's now like a real amount of money for them, right?

Starting point is 00:20:03 Like three, 500, 600 people engaging on something like that, could really move the needle for, you know, you'd be surprised how many artists actually just because of how little they earn for the most part on, you know, traditional streaming services. Yeah, yeah, I have some friends who are musicians and it's not pretty. One thing I wanted to ask about was for the staking, I realized that because of the price of the audio token, that at the moment it would cost half a million dollars to be. become one of those node operators that can stake. And that's, I mean, actually, I think compared to just trying to remember what the dollar amount was when sticking launch on the beacon chain on

Starting point is 00:20:49 ETH too, I think it was like 16,000 or something. But I was wondering, like, is there a reason why it's so much more? Like, are you, you know, going after some kind of like, you know, professional operation or like, what's the thinking behind that level? Or is it just like you didn't anticipate the price we go up this much? Or is it just like, you didn't anticipate the price we go up this much? Yeah, so the level was intentional, although I think, you know, if we could go back in redo history, something that varied a little bit more with the current market dynamic rather than being a fixed number would likely make more sense. But the barrier to entry here was intentionally very high. And the reason for that is it actually, to run a node on the audience network and have it be able to meet the minimum

Starting point is 00:21:43 specification and requirement for a node is pretty expensive. It's like not a straightforward thing to do and requires a level of expertise today that's not broadly accessible yet. So that's actually why there's a separation between you can delegate tokens and you can delegate as little as 100 tokens at a time. So there's a much, much longer tale of people delegating tokens to people who run nodes professionally. But the goal was for the folks operating nodes to be like, you know, really professional hosting businesses. The other side of this that is worth touching upon is that because those node operators

Starting point is 00:22:27 are, you know, professional, real, legitimate hosting businesses, there's some responsibility. that comes as a node operator with respect to the content that gets stored on your node. So if someone uploads something that they, you know, don't own the rights to, for example, right? As a node operator, you know, you are responsible for like when kind of rights holders file DMCA notices and things like that to respond to them. And I think that's something worth calling out is that decentralization does not. need to mean like, you know, mass sort of infringement of rights, right? And that's why, that's why the incentives around the network were structured this way, right? Like, the, the node operator archetype that is on audience, right, someone who has level of resources that

Starting point is 00:23:21 you just mentioned to be able to come on here, you know, has no interest in hosting, like, things that draw like the wrong kind of attention, right? So that's actually why, you know, audience has not really had run-ins or issues like on on on that front right like you know our goal with designing this network was to help artists get paid more right not to to defraud them or to you know take away their livelihood through like you know people putting stuff uh up that you know that isn't paying the right person yeah so um so yeah i think that it was really those two It's like the complexity of running a node and to be able to provide a high quality of user experience and service to end users that are fetching content from those nodes. And then just the nature of like music attracts, you know, some some not so great behavior that, you know, we wanted the people who are running nodes to be like known, named like businesses or individuals that actually like have a presence and exist in,

Starting point is 00:24:33 in the real world, right? Which, again, decentralization, you know, is, can both decentralization and kind of decentralized control can go hand in hand with, you know, respecting the rights of content. I love it. I think that's just really cool and smart.

Starting point is 00:24:59 So a couple things. So first of all, just for listeners who don't know what DMCA take down is it's, if I remember correctly, it's something like Digital Millennium Copyright Act. Okay. Thank you. Which, so, because I've sent these out before where like someone stole my writing. And I was like, you need to take that down.

Starting point is 00:25:20 So, you know, I think that's great that, you know, you are seeking these professional operators who would, you know, abide by the law if they were to receive a request by that, a request like that. And, you know, it's interesting that you just raise this issue because I was going to ask you, like I noticed two years ago, The Verge wrote an article calling your service a copyright nightmare and said it was at that time full of pirated material. And the truth is actually when I first started learning about it, I was like, oh, it's like Napster with a token. And so like is it just because basically all the node operators are kind of more centralized that they're handling it? Or you kind of said, like, it's not even really been an issue. So are you noticing that, like, already, like, you're not even, or these node operators aren't even getting people uploading pirated stuff? Great questions all around. So there definitely are things getting uploaded to audience that shouldn't be in the same way

Starting point is 00:26:24 that they do to YouTube or to SoundCloud or to, you know, really, really anywhere, right? If you give users the ability to upload things, like there will be some. some small number of people that sort of misbehave. The reason it's not become an issue, though, more broadly, is that, you know, whenever rights holders have approached operators in the network and in the community, you know, at least the feedback we've heard is that 100% of the time, those things have been addressed in a timely fashion. So, you know, I think one thing that is really, really unfortunate, right,

Starting point is 00:27:00 is sometimes folks who write and produce content on the internet don't necessarily fully understand the mechanics of what they're writing about. And I think that specific press piece was, you know, there were just a lot of things that, unfortunately, I think that reporter got a little bit wrong about the actual situation with respect to the network. If that narrative were true, you know, there would have been a lot more anger and, you know, lawsuits and who knows what else, right, that would have started flying around from the broader music community. But I think we've been fairly warmly embraced, right, by the broader music community. And I think it's because we took this approach that I just described to you, right? Like they're, like by being decentralized,

Starting point is 00:27:56 but still aligning incentives around positive behavior, you can, I think, get the best of both worlds here, right? Like, you know, you don't have to use, you don't have to trust our company when using Audius. But there is still, you know, there are laws and rules that exist for good reason. And, you know, allowing people to hide behind the shields of anonymity. in some cases, like you might be able to if the requirements were much lower or much smaller, you know, would, I think we felt would lead to a misalignment around those incentives, right?

Starting point is 00:28:37 We want all the folks who run nodes on the audience network, which, you know, today they're, I think, you know, like 60 or 70 nodes last I counted, like those should all be known, you know, quantities in the world, right? Okay. And so a couple other things I want to ask about this. So one thing is, and I think I might already know the answer to this, but I did notice that the audio token is set to inflate at a rate of 7% a year. And I was wondering, as I'm sure you're well aware, a lot of people in the crypto community like coins that have, you know, caps or not caps, but like maybe low inflation. But I was curious to hear about why, you know, you're inflating at some of the,

Starting point is 00:29:23 high rate. Yeah. So we felt that it made more sense to distribute the token supply over a very long period of time to, you know, the community members that were creating the most value in the ecosystem. That effectively meant that rather than distributing like a very, very large amount of tokens upfront when the network launched by delay, you know, basically having that happen over a period of, you know, I mean, really for perpetuity, that would lead to a better kind of distribution of power and control in the community. So, you know, I think, I mean, a lot of, like, the design around Audius was sort of inspired by, you know, a lot of the ideals that, you know, Carl Marx and some of those early philosophers around like capitalist economic structure laid out that like, you know, it should be possible for

Starting point is 00:30:25 folks who, you know, make use of capital to earn some of that capital back over time from the work that they do, right? And for that to be possible, there needs to be some amount of inflation perpetually, right? But the way that the staking side of Audius is set up, if you stake and actively participate with your tokens, your percentage of control of the broader network doesn't get diluted over time, right? As it stands right now, you actually, by staking, you can grow your percentage of ownership over time just by function of the participation in staking. And what it basically means is the network heavily disincentivizes passive holding and incentivizes active participation, right? Because if you just hold those tokens and do nothing with them, you get diluted down at an aggressive rate over time, right? So, yeah, one of the interesting things is that like about designing these sort of crypto economic systems is that like, you know, we could. sit in a room and try and do the best we can. But ultimately, once it's out in the world,

Starting point is 00:31:42 it is in the hands of the community, right? Like we, the decisions that our team made prior to launching the network are now, you know, only changeable by the community. So all of what I just said aside, there is a growing contingent within the audience ecosystem that wants to change that inflation rate, I think, for the reason that you just laid out. So it will be interesting to see how that plays out. I mean, I think this is the. community's property and the world's property. So, you know, at least I personally would be supportive of whatever they decide here. But that was at least the initial intent here was that over time, the network should be controlled by the people who are actively using it, not by kind of like

Starting point is 00:32:26 passive holders of that capital. All right. So in a moment, we're going to talk a little bit more about the decentralized and centralized aspects of running crypto networks. But first a quick word from the sponsors who make this show possible. Does your firm need rigorously vetted crypto market data that's aligned with the latest regulatory standards? Since 2017, digital asset research has delivered high quality crypto data to institutional clients like Footsie Russell and Bloomberg. Digital asset research offers clean crypto asset prices and verifiable volume data that's calculated from highly vetted sources, crypto asset reference data, and an events calendar that tracks token and blockchain events like hard forks, soft forks, and client and application updates.

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Starting point is 00:34:01 fees to worry about. Download the Cryptba.com app and get $25 when using the code Laura, L-A-U-R-A. The link is in the description. Ledger is the secure gateway to buy, exchange, and grow your crypto. What you need is a ledger hardware wallet, which combined with the Ledger Live app, gives you access to all your favorite crypto services and DAPs from one place. All that with some of the best security. No need to use different platforms to manage and secure your crypto. You have one place for all your crypto needs. Visit ledger.com and make your crypto journey easier and safer. Back to my conversation with Roaniel. So we were just talking about how you started as a centralized service and now

Starting point is 00:34:45 governance is in the hand of your token holders. And so I was so curious earlier today when I had trouble logging into the app, I was wondering because apps are typically run by centralized services, and I sent you a message saying, oh, hey, I'm having trouble logging in, and you said, oh, I'm going to ask the team. So I was wondering, is that a centralized company that you were referring to there? And is it a centralized company that's running this app on the decentralized protocol? Or is it, because like, you know, Ethereum has this foundation and the foundation funds these different teams. you know, working on different clients or whatever.

Starting point is 00:35:30 I mean, it can be outside companies too. But so it's kind of curious, like, what is centralized in Audius and what is decentralized? Yeah. So there is a audience that controls the kind of like the project's treasury and allocates those funds out to companies like my company. So there are a few other companies that now exist in the audience ecosystem as well that, you know, get similar. kind of grants from the foundation. But specifically to your question, you know, and for everyone's context, this was around Twitter-O-O-O-O-O-F. So there's a mechanism that Audius used to kind of, you know, prevent name squatters from registering en masse, like verified usernames on

Starting point is 00:36:20 other platforms. The network will prevent you from registering a handle that is verified on Twitter or Instagram. So when Laura tried to sign up with her verified Twitter handle, the front end was like, you can't do that or whatever, right? So that is one aspect of the network's behavior that is centralized today. And there are a couple others that I can mention, but it's not possible to authenticate with Twitter in a decentralized way. However, your wallet when using audience,

Starting point is 00:36:56 is still custody with you. So your account is actually controlled by you. The only aspect of that flow that our company is able to affect is adding that checkmark next to your name. And the only way that that happens is if a user either during sign-up or afterwards is able to authenticate with a verified account on another platform. So that's that's one thing that like we we haven't really. And it is a tradeoff of usability versus decentralization.

Starting point is 00:37:32 So like there are strategies that people use around this like Keybase will have people tweet like a message. You know, like I'm setting up my keybase. But I mean, let's let's be real here. Right. Like if, you know, like Dead Mouse or Steve Aoki signs up for Audius and like both of them use audience, like, are they really going to tweet? Like, you know, I am setting up my audience account and like proving that I'm verified, like, probably not, right? So a tradeoff had to be made there, but, and then there are a couple of other places where, we're kind of like day-to-day engagement

Starting point is 00:38:09 with the network touches some centralized services. So for example, if you send audio tokens from your wallet, even though your wallet has custody and control, of those tokens and the signature around the transactions happening on your browser, we have a relay that will pay the gas for that transaction on your behalf. So you could still transact if you put Ethereum into your wallet to send it, but the vast majority of our users don't know or understand things about crypto. So I think where we've tried to make these tradeoffs is with the goal of usability in mind, but with a hard, bright line around the network's functionality cannot be dependent on us as a central party. So, you know, Laura, like you still could sign up for an

Starting point is 00:39:01 account, you just wouldn't be verified, for example, like if our company was not doing that little verification service, for example. Similarly, you could still send and engage with, you know, the tokens within the product, but, you know, the usability around it would be degraded, of course. So, so that's kind of how we, how we went about it. Those are really the two primary things that are centralized right now. So you're the remainder of the network. Yeah. So when you said that you were going to ask your team, that was the centralized company that you were asking. And then so would there be, when you say there are other companies that are working on Audius the Protocol, then would there be a case?

Starting point is 00:39:43 where like we might end up with more than one audience app or more than one audience website. And okay. So that's a great question. Yeah, I'm nodding for everyone listening. Yeah. Yes. So actually, you know, this isn't, I think as broadly known or people are always shocked when I tell them this.

Starting point is 00:40:05 Like the majority of listening on audience doesn't come from the audience product. I think there are over 50 apps now that exist in the ecosystem. some of which are dedicated music players, but many of them are just random other things. Like someone made this music racing game, which is super fun. I would recommend everyone try it. What is music racing? So you're in a race car following a track, and there are obstacles in the track that are synchronized with the beat of the music. So you sort of like steer around them or you can get these like bonuses by hitting them.

Starting point is 00:40:42 And is it only for select songs or is it like some kind of algorithm so you can do it to any song? Yeah, it's algorithmics. You can do it to any song. There are over half a million tracks on, on Audius, right? So this developer was like, I've always wanted to make this game, but I never had enough like tracks to do it with. Sounds fun. Yeah, yeah, yeah. So yeah, anyone can build their own Audius app. There are even some kind of institutional players in the music ecosystem that want to build like customized streaming experiences, for example, right? Or some artists are wanting to build like kind of a fan club structure around

Starting point is 00:41:24 their, you know, streaming kind of front on audience. So, yeah, it's a really, really neat ecosystem that's kind of sprung up around this. But yeah, the cool thing here is because that like any programmatic interaction that happens with the network from the core app that our team puts out can be replicated by or even co-opted by any third-party product too, right? Like there's no special permissioning or something. And when you use the audience app on your phone, your phone is actually going and talking directly to nodes on the network.

Starting point is 00:42:02 There's no interaction happening with our company for like normal use of the product, right, outside of the couple of exceptions that I mentioned. So, so, yeah. It's like my ether wallet or my crypto. Yes. Yeah. Exactly. Right.

Starting point is 00:42:18 Where those apps are able to talk directly to Ethereum and do what they need. Yeah. Well, so it's funny, actually, that we're ending on this note because my next question is, is really relatable to this, you know, my ether wallet slash my crypto thing. So when signing up, the service also sends an email to the user saying, audience cannot reset your password. And then, so by the way, I'm sure this is ultra confusing for non-cributive people. I understood what you were saying, but I should just point out, right underneath that

Starting point is 00:42:53 is a big button saying reset my password or reset your password or whatever. So I was curious, like, so I didn't click it because I was like, this is like, you know, like emergency button and I'm not in an emergency, so I'm not going to click this right now. But I was curious, like, if I were to click it, what would happen? And, and like, yeah, I'm assuming it's not something that goes through your company. Well, I don't, I have no idea. What goes on at that point? So what you were interacting with is this kind of novel account management solution that our team developed called a hedgehog, which is sort of a reference or homage to there's this parable of the fox and the hedgehog, right? And, you know, the fox is

Starting point is 00:43:41 quick and agile and can do many, many different things, whereas the hedgehog is only really good at, like, becoming a ball, and then it's spiky and predators can't get it, right? So what we were trying to say with the parable there is, like, Metamask is this amazing Swiss Army knife, but for an end user, it's, like, very difficult to set up and use. Whereas it's, it's, you this Hedgehog solution is like dead simple from a user's perspective, but it makes a significant number of tradeoffs that may or may not make it make sense in other applications. But we felt around Audius, it made sense. So long story short, what it does is when you sign up for Audius,

Starting point is 00:44:23 you put in a username and password in the app either on your phone or on desktop. And then your browser is actually using that input to encrypt a, a locally generated entropy that secures your wallet, basically. Right. So there's locally generated private key, encrypted locally with that data. And then that encrypted blob is actually what gets emailed to you. So that email that you get is actually a self-contained, like, ability to recover your account. It's not even password reset, per se, because you could just re-encrypt the same wallet

Starting point is 00:45:04 it with a different thing. But we actually were able to set up a mail relay service with no logs enabled and no retention of the messages that it sends. So basically, that mail relay is your browser at the time you sign up sends your key to this mail relay, which sends it to your email. And then that's effectively the backup of your private key is in that email. So it's literally like embedded in the link that when you click that button could let you recover your account, like if you forget your password, basically. So, so yeah, calling it password reset was a misnomer. We actually have tried three or four different sets of verbiage on that button, but all of them confused users more than this one, which is why we kept it there, even though it's not resetting your password,

Starting point is 00:45:58 right? It's like you can just set a new password on the same, on the same information. And, yeah, people just got so confused by it. Well, I would suggest that the email sees something like, Audius, the company cannot, you know, reset your password. You can reset it yourself using this button or something. Because, like, to say, audience can't reset it. And then right underneath is a button saying reset it. Like, I think just like from user experience, like, I'm not next to these things,

Starting point is 00:46:28 but I, yeah. Anyway, not like I'm, you don't have to say my advice. You're absolutely right. And I think it just shows how challenging usability in crypto still is, right? Like, this is not the fact that, like, the basic questions of how do you access your account don't have, like, well-accepted solutions that the whole world follows is like, it's also so cool, right? Because it means that we're all, like, still, you know, you're still super early to this

Starting point is 00:46:57 if you're listening to this, right? And thinking about questions like this, right? but we need to do better as a community, right? Like, this is not, you know, so Audius today as over six million people listening every month and over 100,000 artists have uploaded. We do feel strongly that, like, it would never have been possible to get to this level of usage without making some tradeoffs around, you know, like, I think we can all agree that storing a private key in your email is not like a super secure way to do that.

Starting point is 00:47:31 but we also go to great lengths to instruct users not to store any meaningful amount of funds in their audience wallet. And then there's also a mechanism to connect third party wallets. So you can connect a Metamask wallet as well. You can connect, you know, like a number of other, you know, anything that's like wallet connectable, right? So, so yeah, there's, again, there's, there's tradeoffs, I think, with all of these things. But, you know, I do, you know, I think I, I, I think I, I am very proud of the work that like our community has done to try to make this accessible to a broader audience because the majority of users of audience today have no idea there's any crypto there, which is pretty cool, right?

Starting point is 00:48:15 You know, they just want to come listen to cool music and hang out with their friends. Yeah, and I have a bunch of questions for you about building a crypto product for non-crypto people. But just because this is a crypto show, do you want to ask one question because this is something I think my audience cares about for whatever reason, just, you know, how tribal crypto can be. So obviously, Solana and Ethereum, I think, you know, for a lot of people are seen as somewhat competitive and you've kind of embraced both. And I was curious, like, why that is. And just as a builder, what you thought Ethereum was good for, what Salana was good for, etc.

Starting point is 00:48:52 Totally. And I, at a super high level, like, I think this tribalism is really damaging, unfortunately. right? Like, these are tools, right? Like, there's no, like, the Hammer tribe doesn't get mad at, like, the Mallet tribe because they, you know, one is slightly better at some things and one is slightly better at other things. There's tools. But money is involved, so. Oh, I know. And I wish, I wish it could be that peer and straightforward, as I just put it. But that genuinely is how I, you know, as a builder in the ecosystem, think about it. I mean, these are, these are tools. Like, uh, they, they are built for a purpose. And, you know, you can use them for various purposes. And, you know, with that aside, you know, I'll give the feedback that's, you know, probably going to

Starting point is 00:49:41 get me flamed by both sides afterwards, right? I think the network effect around Ethereum is just so powerful. And that's, you know, that's even the first, that's the first community in crypto that like I really became part of and got excited about like prior to Audius. I was a full-time investor at Kleiner Perkins. And and what really got me excited about crypto more broadly was this ability to program like anything with it. Right. You know, I like Bitcoin. I thought it was cool. But Ethereum in my mind just especially as a software engineer thinking about it just like opened up this whole world of like really cool stuff you can make. Right. And the network of, effect around that persists, right? Everything from, you know, the ecosystem around, uh, tokens and

Starting point is 00:50:34 wallets and, uh, everything, right? Like the moment that the audience network launched, um, it was supported by like hundreds or even thousands of third party applications without any of them like asking us or us asking them to do anything, right? Like just happened. So on a, you know, by contrast, I think rather than trying to be everything to everyone, took the approach of being really, really, really damn fast and, like, good at a specific set of use cases, which, you know, so happens to overlap really, really well with what audience needs, as well as it overlaps with, you know, some things like the serum decks and other things, right? From a usability perspective, you know, Solana lets us confirm things to

Starting point is 00:51:25 users far, far faster, it lets us, you know, just do much more, right? The average Audius user never actually touches Ethereum, right? Like if six million people were touching Ethereum every month, you know, from Audius, right? I think we would, we would be creating a lot of problems for the ecosystem. We would also probably be costing like, you know, tens of millions or hundreds of millions of dollars in gas, right? So, you know, I think what I love about Solana is that by by being focused, by saying, you know, we're not going to be, you know, try and be everything to everyone, but we're going to be really, really, really great for the people who need a significant amount of scale or have usability constraints that, you know, Ethereum can't serve. It's a fantastic

Starting point is 00:52:14 solution for that, right? So, you know, I think they both have a place in this world, as do many other tools, right? Keep in mind these are tools. And different tools can be good at different things, right? Like I think that's, yeah, that's where I'd finish off on. All right. So, yeah, now let's talk about the user growth because, you know, I do think, you know, as you said, it's not obvious at all when you go to this website or the app that it's a crypto project. And I would be curious to hear, you know, from your perspective, how did you get?

Starting point is 00:52:55 the community to grow to the point where you now have more than 6 million monthly users? Yeah, I mean, I think the credit all lies with that very community, right? Our little project team that built the first version of Audius and now has like a much more diminished role in the ecosystem, just given the size and the scope of all the various work that's going on that the foundation supports and other things, for our little team, of 20 people to be supporting 6 million users just would never have been possible without the communities kind of embrace and support and active work being done to do that, right? I've been explaining this a lot to traditional tech people lately because, you know, as I

Starting point is 00:53:45 mentioned, that's like the world that I kind of came from before working on Audius. And people are just shocked when they hear that, you know, our team is so tiny. And we're not that tiny compared to other crypto projects, right? Like everyone here listening knows that. But when the community is effectively the marketing team, the hosting team and infrastructure team, they are like an extended developer team. You know, they're like more community people building with Audius than there are like, you know, people at my company.

Starting point is 00:54:19 you know, you can do so much more by like opening up, opening up those floodgates, right? But were there like any pivotal moments where you felt like, oh, that is what really, you know, got like this? Yeah. Yeah. Like were there kind of like bursts of new users that came to the platform? Yeah. So I can I can just talk quickly through like our history. So, you know, we just, The product launched publicly in September of 2019, and that was in like an incentivized test net capacity, right? From 2019 to like mid-2020 or so, we grew in these little fits and starts, but we're

Starting point is 00:55:07 mostly going sideways, right? The thing that was growing was the base of content uploaded to the network, because, you know, content doesn't go away, right? people, as new users come, they upload more content. Content can grow linearly, even if usage is like flat over time, right? And in retrospect, you know, I don't think we realized this at the time, but there was an inflection point that the network hit around like 80 to 100,000 tracks, where there was enough music here that when a random user showed up from the dance community,

Starting point is 00:55:45 which was really where our early bread and butter in terms of usage was, they would find stuff that they liked, right? And then they would engage and they would stay and do more. And there was, you know, around August or so of 2020 was really when we saw those metrics all kind of shift in lockstep. And my only guess as to why that happened was because there was like enough content here. From then, so that was in August of 2020, there was. around, I think, 100 to 120,000 monthly users on Audius. Today, they're over 6 million. And, you know, it hasn't been that long since then, right? I think it's just when like a viral

Starting point is 00:56:30 feedback loop around a kind of network-driven product starts to work, it like it has this runaway effect, right? Because it's self-reinforcing. Like if more content increases user engagement and retention, the increased user engagement and retention means more artists see that and say, oh, there's an audience here and I want to serve them, which leads them, which leads them. So it's like this virtuous cycle that kind of is self-perpetuating, but it's like really hard to get started. The analogy I like to give people is like think, think about like pushing a rock up a hill. And at some point, you crest the hill and the rock starts rolling away. And then you're just chasing it and doing the best you can to keep up.

Starting point is 00:57:13 with it, right? Because it goes faster and faster as it goes down. So, like, I think the community has been able to scale the level of support and work that they do for one another in a way that, like, our company never could have, right? And I think that's what allowed us to grow so quickly. if we had been like a centralized company that controlled all this infrastructure, controlled all of this, like, you know, even the cost of hosting all of this,

Starting point is 00:57:46 let alone the cost of like, you know, just basic customer support. Like people ask questions all the time and stuff. You know, we would need to be like hundreds of people to service, the amount of demand that exists here. So I do think the community,

Starting point is 00:58:01 uh, uh, owned aspect of the network, allowed growth to multiply and to reinforce itself. But ultimately, it's just a nature of a network, I think, that led to this, right? It was just crossing over some critical mass or like a tipping point or whatever, you know, however you want to describe it. At some point, it just, you know, things clicked and started working. And so for the big name artist on the platform, like Scrillex or Dead Mouse, Diplo, like, how did that happen? Did they just hear about it through Word of

Starting point is 00:58:34 mouth or did you approach them directly or, you know, like, how do you get these artists with this level of name recognition to join? Yeah. So, you know, I'll talk about those three and then talk about like artists more broadly. So Dead Mouse was actually one of our earliest supporters at Audius. We started talking to his team in like late 2018. That was like a few months after. Yes, yeah. So we got in touch with him and his team, and he had specifically been looking for something around this. I mean, actually, one of the early theses, like when we were thinking about Audius was, you know, really looking at like what title did or tried to do early on, which was to say, like, we're going to make all of the artists that use title, like, owners of title. They literally went in, like, issues. stock warrants to those early artists that were on title. The early kind of target list that we went after because we took a lot of inspiration from that, right? I think they fumbled a lot of things along the way.

Starting point is 00:59:49 I'm hopeful that under new ownership, they can find their footing and find their way to, you know, some cool stuff. But Dead Mouse, Joel, was one of the earliest supporters of title. So when he, I think when, when like our little, you know, email intro like crossed over their plate, they kind of had, you know, pattern recognized like, oh, we've seen this before. Like, this is interesting. We want to learn more. So, yeah, he was an interesting case. Scrolex and Diplo are more kind of the typical case, which is, you know, a mix of, like,

Starting point is 01:00:26 us messaging them for months and years or whatever. and then eventually they hear about it from enough of their own community of fans as well as other artists that they follow, right? So, you know, there's a lot of a lot of neat content has broken out on, on audience or like been shared on audience exclusively or for the first time. So a lot of folks were just forced to start engaging and hanging out on the platform, not necessarily uploading their own stuff, but just to like stay on top of what trends are emerging. And this has always been like niche by niche and those niches aggregate and slowly roll up to larger and larger audiences. Like one of the earliest niches that got really excited about audience was this Jersey Club community, which is like a specific, they have a specific sound of music that they produce. There are a few really influential and notable folks in that community like REL and a couple of others that, you know, kind of anchor it. And, you know, a few of those really early folks just happened to come across, like, some press we got around the product launched, like in 2019.

Starting point is 01:01:35 And we're like, oh, this is cool. We're going to try it. And that was enough to get the whole community on. And those people retained and engaged really, really well. So for a diplo or a Skrillex, I think the sentiment that needs to exist for them to want to engage with a new product, is that enough of their peers and enough of their fans are already there, right? So, so, so, yeah, we slowly rolled up to that. And today, most, most of our work on artist advocacy is just fielding inbound, which, you know, is just the tables, like, turn very dramatically, right? We stopped being able to do outreach. But, you know, in the early days, like, I would just sit in DM and cold email people and be like, please try this, you know, like, and, you know, yeah. Today, things are, you know, we just couldn't, couldn't keep doing that given the scale that we were at.

Starting point is 01:02:35 So like, even starting to rely on the community more to educate one another and advocate this, you know, more broadly, more publicly. So our artist advocacy work today is really focused on helping audience appeal to new and different types of music creators and and music listeners. So, you know, as I mentioned, like our early user basis has been mostly dance musicians. There are a lot more folks in hip hop coming on now. And Latin music's the other area we've seen a ton of growth more recently. A lot of that has been driven by kind of, I think, those communities being functionally similar in a lot of ways to the way dance communities are, right. Like it's, it's, um, uh, it's less top down structured, organized content and much more this like grassroots like things emerge from, from this like diaspora of like crazy things happening

Starting point is 01:03:38 or whatever. Um, and audience is much more well suited, I think to that like kind of, uh, uh, grassroots bottoms up sort of approach than, uh, you know, like the very top down like, you know, like institutionalized content kind of approach. right. Yeah. So it's kind of amazing we went this far without getting into the TikTok deal. So we have to do that now because we're already over time. So Audius was selected as TikTok's partner to enable song transfers on the platform. What does that mean? And why is this such a big deal? Yeah. So just just setting some context to kick us off. Like it's actually not very easy to upload audio into TikTok. You'd be surprised, like, the way, the ways that people do it. Like, because how do you get like an audio file, like an MP3 file or something onto your phone, right? You know, people will email it to themselves and then, like, put it into the files app on iOS.

Starting point is 01:04:41 And then depending on your permissions, TikTok may or may not be able to access it. It's actually, like, not very simple to a point that, like, there are artists in our community that will hold their phone. up to their laptop and like play the track and record it into TikTok because it's easier to do that than to go through this this rigmarole. So what the audience integration enables is a solution to this problem. So you can in audience on any track that you yourself uploaded, there's a one-click shared a TikTok button. And if you click that, the content gets pushed into your TikTok account. So if you're using the audience mobile app and then you know, assuming that you have TikTok and sold, it just opens TikTok and pushes the content over.

Starting point is 01:05:33 So the reason that's, I think, you know, exciting for the audience network and community, right, is that it now for the first time lets artists kind of draw on the audience that they have on TikTok. There are some folks in audience like Wookie, for example, and Dylan Francis. is another one. I mean, there are people of millions of followers on TikTok, right, that they haven't been able to monetize very well to date. They now have a chance to kind of start to draw some of that audience over to

Starting point is 01:06:09 audience because the sound, when it's in TikTok, actually shows as, oh, it came from Audius and whatnot. So we actually, even as a result of that, you know, there's been a significant kind of uptick in usage metrics just from people seeing those sounds starting to float around on TikTok. On the TikTok side of things, I think the reason, you know, they were excited about this was it just, you know, it made it easier for artists to upload stuff. And it's also worth saying, like, we're not the only application that has that functionality. So like Ableton and some other sort of like audio production tools,

Starting point is 01:06:51 have this natively as well. But we are the first streaming service to have it. So I think for the kind of average creator, this has been a much lower kind of friction way to get content into TikTok than to like go into their, you know, Ableton and set up a new export and do all this sort of stuff. So yeah. And so, you know, obviously audience doesn't have the artist base

Starting point is 01:07:21 or even, you know, anywhere near the number of songs that, like, a Spotify or Apple music has. And I did read you have close contacts, I guess, at TikTok. But I'm sure also you must have had something in your pitch that they found compelling. Like, or maybe it doesn't matter to them the number of songs that are available. Like, like, do you have a sense of, you know, what it was that appeal to them about choosing a platform that really is, you know, still so much smaller than these other ones that could have been selected. Yeah, so I think a couple of things there. I don't think this is like a mutually exclusive sort of thing, right?

Starting point is 01:08:02 Like TikTok is within their rights to enable other platforms to do it too. However, I don't think Spotify, for example, has the rights to redistribute content that's in Spotify, right? So a lot of folks don't realize this for everyone listening. You actually can't upload things to Spotify yourself. If you're a musician, you have to sign up for a third-party distributor service, and you give them your content and they push it into Spotify. So it would actually be the distributors kind of role to push it into TikTok as well, not Spotify's.

Starting point is 01:08:42 So all that said, who knows, maybe they will strike. some new licensing structure that allows them to do that. But in the case of Audius, right, you know, the user who uploads and manages the account has, you know, the full control of that content. So if they are the ones, that's why only the person who uploaded it is able to actually push it into TikTok. You know, that's the equivalent of them like doing a drag and drop upload just directly to TikTok. It just so happens that TikTok doesn't really have a good, you know, a good user experience or workflow around that. So, yeah, I think it was just a matter of there aren't really, you know, I kind of referenced this earlier, like, Audius is some parts

Starting point is 01:09:29 distributor, some parts streaming service. There's no other like hybrid kind of approach that that covers both sides. Yeah, it's like, because it's just a flatter structure that is, yeah, that's fascinating, actually. I mean, there's so many things about how crypto networks will change business models that I find really fascinating, but this is like a prime example. Okay, so we're well over time, but I just want to ask, what's next for Audius? What do you have up and coming over the next several months? Yeah, so there's so much coming up and so much that I don't even know is coming up because there are like just people in the community working on cool stuff. But the things that I'm personally most excited about, at least are monetization tools being much more fleshed out over the coming months.

Starting point is 01:10:18 There's a lot of interesting stuff in the pipeline that will help artists like better understand and segment their audience. So like a lot of artists today just don't really have good answers to basic questions like who are my fans, how do they find my content, and stuff like this. So all of that raw data exists in Audius right now, but you know, you need tools to be able to explore it and like understand it, like think like BI tools for artists. So really excited about that as well. And then yeah, I mean, I think you're going to continue to see more and more artists in new and different genres or areas of music, onboarding and getting excited. So, yeah, I mean, I think, you know, the best, the best time is yesterday,

Starting point is 01:11:10 but the next best time is today to get started on a new platform and building a new following. So, and yeah, you don't have to be a musician to use audience. There's actually a very robust sort of curator ecosystem as well. So if you want to help make playlist, if you want to, you know, help curate content by reposting and engaging with it, there is a very important. there's a whole kind of ecosystem of folks on that side as well. So I think we're just going to see more, more of all of that, I guess. But yeah, the concrete features I mentioned are things that I'm super excited about. Great. Well, this has been so fun. Where can people learn more about you and Audius? Yeah. So you can learn more about Audius at audius.org or at audius.co. So

Starting point is 01:11:59 audience.org is kind of, you know, the information put out by the foundation. Audius.com is the company that I work on, and there's a user experience there that lets you play with the product and engage. And then, yeah, go follow the project on Twitter. It's just at Audius, A-U-D-I-U-S project, P-R-O-J-E-C-T. That's where all the best news and updates about the network can be found. Perfect. Well, thank you so much for coming on Unchained. Thanks for having me. Thanks so much for joining us today.

Starting point is 01:12:36 To learn more about Ronella and Audius, check out the show notes for this episode. Unchained is produced by me, Laura Shin, with help from Anthony Yun, Daniel Ness, and Mark Murdoch. Thanks for listening.

Unchained - How Crypto Streaming Service Audius Hit Six Million Monthly Active Users - Ep.270

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