Ever consider what the future of the music industry looks like with the advent of blockchain technology? Cédric Cobban certainly has. Co-founder of PeerTracks and member of the BitShares Music Foundation, Cédric seems to have a clear vision when it comes to music's role in the emerging decentralized economy.
I recently had the opportunity to speak with Cédric about the PeerTracks P2P music platform and his outlook on the future of music and what it means for both artists and fans.
Also read: Bitshares Out to Make P2P Music Profitable
Listen, The Future Of Music
What is PeerTracks and why is it important for artists?
Artists using PeerTracks can benefit in multiple ways. First of all, they can sell their music without middlemen and without entrusting anyone with any funds. It's pure peer-to-peer. It's transparent, so you know how many people listened to or purchased your music. This is great but not a game changer. Where we fundamentally differ from other music streaming/retail websites is the incentive structure put in place by Artistcoins. This transforms passive listeners into active promoters that stand to benefit financially when their artists benefit.
What is an Artistcoin?
Once an artist has created his profile on PeerTracks and uploaded the music he wishes to sell, he can choose to create his own Artistcoin. So Johnny could create Johnnycoin and sell that from his profile to his fans. There are two reasons why someone might want to own a Johnnycoin. Firstly, Johnny can decide to activate a buy back mechanism. This means that whenever his music is sold on the Peertracks website, some of those funds are used to buy back Johnnycoins from whoever is selling them on the blockchain's internal market. The bought back coins are automatically destroyed reducing total supply. This means the more his music sells, the more Johnnycoin can go up in value.
The second reason a fan would want to own Johnnycoin is because the artist can offer perks and goodies to anyone of his coinholders. For example, "if you have 20 Johnnycoins, you get 50% off all my music and merchandise. If you have 100 Johnnycoins you get to come to my shows for free." This creates a demand for that artist's coin, once again, increasing its value on the open market.
Is PeerTracks based on a streaming or download model?
Both! The original plan was to make it a download-only site. But we've just decided to tackle the streaming challenge about two weeks ago. PeerTracks will be a platform to buy and sell music, trade around different Artistcoins and even subscribe for unlimited monthly streaming. I can't go into too much detail about streaming yet, but all plays will be tracked and it will be done transparently removing the need to trust PeerTracks.
Why would a fan choose PeerTracks over other music streaming or download sites?
Most sites take a huge cut from each song sale. Sometimes they have no choice since they must pay the 30 cents associated with credit card use, other times they just take the profit because they can. If the artist is to make any money from his music, he is then forced to sell his music at a higher price to offset that huge cut that was just taken by that third party. This higher price can turn people towards the torrenting method of getting music. That giant fee does not exist on PeerTracks. The artist is free to set his own price and has much more wiggle room to lower his price simultaneously making as much as he did on iTunes, while turning people away from torrenting and back into buying music.
The transparency of blockchains also lets the consumer know the funds are going to the artist directly. The big reason though, is that the fan, by buying Artistcoins, is now incentivized to share the PeerTracks link to that artist's profile/song since he stands to gain financially if it attracts interest, traffic and eventually sales. The same applies for streaming, you know the funds are going directly to the artists being played and by sharing that playlist's link on social media, you are attracting new users to the site (that has cheaper music then elsewhere!)
Can song copyrights be stored on the BitShares Music Blockchain?
This could eventually be done since all blockchains are unforgeable ledgers, but this is not our main concern at the moment. Our 2015 goal is to have a user-friendly platform that aligns all parties' incentives through Artistcoins by allowing people to listen, share and promote music and playlists.
How does PeerTracks make money?
Everything done on a blockchain costs a small transaction fee. MUCH smaller than the 30 cents the Visa/Mastercard network charges. In Bitcoin, those fees are paid to the miners, in BitShares Music, those fees are paid out to the delegates and the Noteholders. PeerTracks intends to hold a lot of Notes.
So it all depends on the success of the BitShares Music blockchain, if there is enough traffic to cover all our costs through the small transaction fees, then PeerTracks itself will be free. If holding Notes is not enough to cover costs, then PeerTracks will charge it's own fee every time music is downloaded. Then there are all the other traditional means of monetizing a site that gets high traffic.
What is the BitShares Music Platform and what are Notes?
The BitShares Music blockchain is a Decentralized Autonomous Company (DAC) built using the BitShares Toolkit. It's a P2P network focused on the new music economy PeerTracks is currently building. The unit of this blockchain is the Note, and there will be 1.5 billion of them at launch. Just like bitcoins are the 21 million units that make up the Bitcoin network. Notes can be traded on exchanges like bitcoin are, but their main use is to collateralize BitUSD, a crypto-currency that is pegged the U.S. dollar.
Could you explain BitUSD and how a listener shops for music and/or Artistcoins on Peertracks?
BitUSD is the only currency used on PeerTracks. Everything is bought and sold in BitUSD from music to merch to artistcoins and concert tickets, BitUSD is what you spend and BitUSD is what the artist earns. This not only shields our users from the volatility common in all other crypto-currencies but also provides a unit of account people are used to - the U.S. dollar. Notes are behind the scene. They are merely the collateral backing the BitUSD. Only day traders on crypto exchanges will know the relationship between the Note and the BitUSD. PeerTracks users will merely be using BitUSD and benefitting from its stable purchasing power.
What motivated you and your team to work on this project?
I am fascinated by the applications of blockchain technology. Truly a world changing invention, like the internet. It blows my mind each time I try to imagine what the world will be like after blockchains have been established for as long as the internet has today. P2P networks have real power, and the first industry to really feel it was the music industry. Kids did not need to understand how Napster worked in the back-end in order to use the program. Music is once again on the front line of experiencing the power of decentralized technology, only this time it'll be a win/win outcome for both artists and fans alike.
For my partner Eddie, he comes from a music industry background. He has worked with all major labels and independent artists also. He saw an opportunity to revamp a system that is in great need of change.
Are there current plans for iOS and Android apps?
There are, but those are further down the line.
When can artists and fans expect the public launch of PeerTracks?
This is hard to answer, but artists should be able to sign up in march of 2015. The site might not be fully operational by then, but they will at least be able to try it out for a spin.
Special thanks to Cédric Cobban for chatting with me. Music applications built on-top of Blockchain technology present some exciting alternatives to today's current paradigm.
What do you think? Will the BitShares Music Blockchain succeed in revolutionizing the music industry yet again? If you believe it will, you can still participate in the Note pre-sale. As of this writing the pre-sale is currently underway with 37 days remaining.
Images from PeerTracks and Shutterstock.