This tweet from Claude von Stroke caught my attention. I don’t know Claude so I don’t know if he realizes it or not, but this vision in disguise is possible.
It’s possible thanks to crypto tech by which I am fascinated and have been studying. In this article, I hope to provide a spark for the folks at Mixcloud or even someone else to realize that it’s possible to have a decentralized community owned and operated by the artists, fans, DJs (or any other musical professional that plays other people’s music). I’d personally love to see it made real!
I’m writing this letter to Mixcloud for three reasons:
- I’m a long-time and passionate electronic music fan and Mixcloud, though they have other content, specializes in electronic music.
- With its existing traction and audience within the electronic music community, I believe it is perfectly positioned to be first to the blockchain party in a meaningful way.
- Mixcloud is the only platform that I know of that’s trying to help the artists who produce electronic music get compensated fairly when their creations are played by DJs. I like the spirit of fairness and community in this.
Let me paint a picture for you of the core crypto business model that could allow Mixcloud to be at the forefront of what technologists much smarter than myself believe is the next 10–15 year transformative tech cycle on the same level as the Internet and smartphones. The word crypto seems fairly synonymous with blockchain in the mainstream now so I’ll use blockchain going forward to describe the tech. (Also, I welcome all uber-tech geniuses to correct me on any of this if I get details wrong.)
Blockchain is a new type of computer that can form its own ecosystem or micro-economy as I think of it. Rather than being a single computer or a network of connected computers controlled by the same entity as in a data center full of hardware controlled by a major corporation, a blockchain is a database composed of a network of independent machines running the same software or protocol on top of them. This forms a decentralized network because no one machine running the software for the blockchain has total control.
All of these interconnected machines and the users behind them are in a trusted relationship. Users are comfortable being connected and putting forth computing power to the blockchain because there are immutable laws that govern the network and that, in the parlance of crypto, is known as consensus. Consensus protocols are the foundation for crypto applications. Plus, the providers of computing power are typically compensated in the network’s native cryptocurrency or token.
Sitting atop all this is a concept known as smart contracts. Smart contracts are enabled by the blockchain and ensure that what the participants in the blockchain expect to happen actually happens. For instance, money coming into the platform via a variety of ways is split among the participants as expected according to the laws of the network. These laws are enforced automatically by the software running on the network, which is where the concept of a Decentralized Autonomous Organization (DAO) comes from.
For the purpose of this article I’m not going to go any deeper than that on the basics of the tech because a) I’m not an expert and b) You don’t need to know much more to successfully process the rest of the article. If you want a much deeper dive and foundational education in crypto tech I highly recommend the video content at Andreessen’s Horowitz’s Crypto Startup School.
How New Mixcloud could work
First, a store of value and mechanism for compensation must be established and marketed. A token/cryptocurrency. I’ll call it Mixcoin. Second, smart contracts (i.e., applications) will need to be built possibly on the Ethereum blockchain because it’s established and programmable. The blockchain business model for New Mixcloud will be multi-sided meaning there are numerous types of participating parties involved in the blockchain network:
- Fans — People who listen to the DJ mixes.
- Artists — Producers/creators of the electronic music tracks that DJs play. Possibly graphic artists as well because they create the artwork for the music and mixes.
- DJs — DJs that publish mixes to the blockchain whether that be recorded or live streams.
- Founding team — The creators of New Mixcloud that handle the governance and the financials of the network. Might also include early software developers who build smart contracts.
- Miners or farmers — These folks will put forth compute power to run the network and mint more Mixcoin for their commitment of resources.
- Promoters (maybe) — Just like in the real world of electronic music, maybe you also have promoters in the mix (pun intended!).
All these entities are Mixcoin holders so depending on the rules of the network they all get a say in how the network operates and can even vote on changes according to the consensus mechanism.
What might need to happen
The network needs assets to gain traction. Mixcoin is created by the Founding Token Holders. Investors and early adopters buy tokens and/or lend compute power to earn them. The artists put in their original music productions and get Mixcoin. The DJs create mixes and get Mixcoin. The fans consume the mixes, like, comment, and share, and get compensated in Mixcoin.
Everyone is compensated according to their level of contribution as set out in the laws of the network and its smart contracts. As the assets of the network grow so does the interest in Mixcoin. As more and more people acquire and purchase Mixcoin to use on the network, the value grows even more. More and more and more of all of the types of participants flock to the platform. It remains decentralized and self-sustaining and the participants own it. Not the corporation that may have originally founded it though the founders should be well-compensated in Mixcoin.
The Virtuous Flywheel
But what keeps the virtuous cycle of everyone earning and benefiting from the Mixcoin micro-economy? Think of it as a Flywheel.
The more compelling the vision for New Mixcloud and Mixcoin, the more early adopters (like myself) will want in and a Mixcoin Army will rise. We’ll provide the early compute power necessary to enable the blockchain and promote the token. The token will get traction and more interest and money will pour into New Mixcloud. The more compelling and valuable Mixcoin becomes, the more artists, fans, and DJs will flock to New Mixcloud because they love the vision, they’re excited, and they want to be part of something they’re passionate about and get a piece of the action.
The more DJs the more fans. The more fans the more DJs. The more DJs and fans the more artists. The more fans, DJs, and artists the more value in the network and the higher the value stored on the network and reflected in the price of Mixcoin, which investors will then want to own more of and miners will want to mine more of. All this creates a lot of value and everyone is being compensated for their participation.
Speed is of the Essence
Based on what I have learned, the first to market with a solution (I hope it’s Mixcloud) like this will transform the electronic music community and create a defensible competitive moat protecting it from competitive erosion of returns over time. Platforms that don’t embrace crypto and still expect music creators, music players, and fans to pay for their assets and attention as opposed to getting paid for these might rapidly go extinct.