Audius raises $5.5 million to decentralize music
Audius wants to cut the middlemen out of music streaming so artists get paid their fair share. To accomplish this, Audius is building a blockchain-based alternative to Spotify or SoundCloud. Serial entrepreneur and DJ Ranidu Lankage founded the company.
How Audius Works
Audius works on a token system. Users can purchase Audius tokens or they can earn tokens by watching ads. The user’s wallet will then pay out a fraction of a cent per song to stream from decentralized storage across the network. In fact, artists receive roughly 85 percent of this revenue. The remaining revenue goes to compensating whoever is hosting that song, as well as developers of listening software clients.
Audius plans to launch an open-sourced product in beta later this year. Already, the project found some powerful investors that see SoundCloud as vulnerable to the cryptocurrency revolution. Audius has raised a $5.5 million Series A. This is led by General Catalyst and Lightspeed, with participation from Kleiner Perkins, Pantera Capital, 122West and Ascolta Ventures. They are betting that Audius’ token will grow in value, making the stockpile it keeps worth a fortune. Later, they could sell chunks of its tokens to earn revenue instead of charging artists directly.
CEO Ranidu Lankage made the following statement:
The biggest problem in the music industry is that streaming is taking off and artists aren’t necessarily earning a lot of money. And it can take three months, or up to 18 months for unsigned artists, to get paid for streams. That’s what crypto really solves. You can pay artists in near real-time and make it fully transparent.
The big question will be whether Audius can use the token economy to get its first creators and listeners onto its platform. This is because it might be less functionally robust than its competitors. There are a lot of moving parts to decentralize. However, there are also plenty of disgruntled musicians out there waiting for something better.
About Ranidu Lankage
Most startup heads don’t have Billboard charting singles on their bio. However, Lankage does. Born in Sri Lanka, Lankage’s hip-hop songs in his native tongue of Sinhalese were the first of the language to be played on the BBC and MTV. Later, he signed to Sony and even went platinum. However, he left the label seeking greater control over his work. After going to Yale, he applied his music business knowledge to build a Reddit for dance music called The Drop with Twitch’s Justin Kan back in 2015.
The two teamed up again on a video version of Q&A app Quora called Whale. Lankage’s next venture Polly, a polling tool built as a complement to Snapchat, inspired the now super-popular Instagram Stories polls and questions stickers. But after an acqui-hire by Reddit fell through, he returned to his first love: music.
How Audius was built
“I’ve always been passionate about building tools for creators,” says Lankage. But this time, he wanted to focus on helping them turn their art into a profession. He teamed up with CTO Roneil Rumburg, an engineering partner at Kleiner Perkins who’d build a crypto wallet called Backslash, and head of product Forrest Browning, who’d sold his software metering startup StacksWare to Avi Networks.
Their goal is to build a blockchain streaming music service where listeners don’t have to understand blockchains. “A user wouldn’t even know that they have a wallet,” says Rumburg. They’ll just hear an ad every once in a while, get a subscription, or pay per stream. Since Audius is open source, developers can build their own listening clients as well, which could specialize in the discovery of certain types of music or offer their own payment schemes.
“I have known Ranidu, Forrest and Roneil for a long time, and have always been impressed with their ability to blend art, technology and business together,” says investor Niko Bonatsos of General Catalyst. “In Audius, they bring together all three skills, with a deep technical heart and a compelling solution for a very big marketplace.”
Tokens, not record labels
For starters, Audius is focusing on signing up independent electronic musicians. These musicians might be popular on SoundCloud. However, they may have to pay for hosting there. Meanwhile, they may not get much back from the platform due to weak monetization options. To further differentiate itself, Audius could offer access to unique content.
To get artists on board, Audius plans to use token incentives. Those willing to jump on first, before there are many listeners, would get a bonus allotment of tokens. These tokens might be worth more if they help popularize the service. Additionally, where artists go, their fans follow. Audius is hoping artists will share its links first because that’s where they’ll earn the most money.
Audius has also lined up a legion of big-name advisors to help it develop its blockchain product and artist relationships. Those include Augur co-founder Jeremy Gardner, 3LAU, EA co-founder Bing Gordon and many others.
The linchpin of Audius will be the user experience. If the system feels too complicated, listeners and artists will not use it. A DJ may earn more per stream from Audius. However, if Spotify or SoundCloud offer better ways for fans to subscribe and generate more plays long-term, they’ll receive all of the supporter base. Considering that, if Audius can hide the nerdy bits while solving the music industry’s problems, it has the potential to become one of the first mainstream consumer blockchain projects that treats the tech as a utility, not just a new stock market to bet on.
Lastly, for EDM Business and everything Electronic Dance Music, check out OneEDM.