Blockchain startup Audius just raised $5.5 million to build a Soundcloud-like platform on the blockchain.
The startup came out of stealth earlier today. The goal is to cut the middlemen out of the music streaming industry, allowing artists to get paid their fair share.
Audius is led by serial entrepreneur and DJ Ranidu Lankage, who hopes to make the platform a blockchain-based alternative to Spotify or Soundcloud. Today, independent musicians have to pay Soundcloud for hosting and have few monetization options. Audius aims to solve that problem, making it easier for musicians to reach new audiences and make money.
To access the Audius platform, you’ll need to buy Audius tokens. You can also earn Audius tokens by listening to ads. Then, the wallet will pay a fraction of a cent per song, streaming the song from decentralized storage locations across the network.
Artists will receive roughly 85% compensation, higher than the 70% compensation they receive from today’s streaming apps. The remainder will go to whomever is hosting the song on the decentralized storage network, along with a small cut to the developers of streaming software clients. Audius will build one such streaming client, but they want to encourage other developers to build their own software.
The next step for Audius is to launch its open-source software in beta later this year.
Audius’s $5.5 million Series A round was led by some high-profile investors, including General Catalyst and Lightspeed, as reported by Tech Crunch. Kleiner Perkins, Pantera Capital, 122West, and Ascolta Ventures also participated in the round. These investors are hoping for Audius tokens to grow in value, turning their current stockpiles into a fortune.
Audius’s co-founders include Forrest Browning (Head of Product), Ranidu Lankage (CEO), and Roneil Rumburg (CTO). The platform has also signed several notable advisors, including Augur co-founder Jeremy Gardner, EDM artist 3LAU, and EA co-founder Bing Gordon, among others.
Lankage was motivated by launch Audius after seeing how current music streaming platforms treated their artists.
“The biggest problem in the music industry is that streaming is taking off and artists aren’t necessarily earning a lot of money,” explained Lankage.
Artists not only face low payments, but also long payment times:
“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 biggest challenge faced by Audius now will be solving the chicken and egg problem faced by every new platform. Audius will need to draw users away from larger, better-established competitors like Spotify, Apple Music, and Google Play Music. At the same time, Audius will need to build an effective and smooth music streaming platform on a decentralized platform. There are a lot of moving parts to decentralize.
Audius CEO Ranidu Lankage was born in Sri Lanka and went platinum with multiple hip hop songs in his native tongue of Sinhalese. Lankage’s tracks were the first Sinhalese songs played on the BBC and MTV. He was signed to Sony, then left the label seeking greater control over his work. Lankage later went to Yale.
In 2015, Lankage started an online platform called The Drop, then later created a video-based question and answer app called Whale. His next venture was Polly, a polling tool built to complement Snapchat.
After multiple ventures and a successful music career, Lankage decided to return to music to build a blockchain-based streaming service.
One of the goals of Audius is to create a platform users can access without first needing to understand blockchain. We’re not all blockchain technology experts, and Audius doesn’t demand expert-level knowledge from its users.
“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 Audius CTO Roneil Rumburg. “They’ll just hear an ad every once in a while, get a subscription, or pay per stream. Since Audius is open sourced, developers will be able to build their own listening clients on top, which could specialize in discovery of certain types of music or offer their own payment schemes.”
Audius Will Initially Focus on Signing Independent Electronic Musicians
Audius will start by focusing on independent electronic musicians. Audius will encourage these musicians to sign up for the platform, luring them away from popular competitors like Soundcloud.
Today, many independent musicians make money from Soundcloud, but they also have to pay for hosting. Soundcloud offers meager monetization options, making it difficult for independent musicians to turn a profit.
To encourage these musicians to sign up, Audius will use tokens. Musicians willing to jump on the platform first, for example, could get a bonus allotment of tokens. The value of these tokens is expected to grow as the platform attracts more and more users. This means the early userbase of musicians will have a financial incentive to promote the platform.
A blockchain-based music streaming platform sounds complicated – but it could be the next big thing in music. If Audius is able to create a seamless and easy-to-access user experience for listeners and musicians while paying competitive compensation, then the platform could easily compete with Soundcloud, Spotify, and other streaming services.
Could Audius be the first blockchain-based platform to reach mass markets? It’s certainly possible. The company just exited stealth earlier today. Watch for an open source beta client to arrive online later this year.