SPEAKER_00: Okay, everybody, welcome to another amazing episode of This Week in Startups. It's Friday, Friday, and we've got a great show for you. Audius's co-founder, Roniel Rumberg, joins us to talk about his crazy crypto project, which is basically a decentralized Spotify or SoundCloud where artists earn tokens for engagement on their songs, and then people create servers and their

SPEAKER_01: own clients like Spotify, and it has generated a billion dollars in market cap. It is a crazy ownership structure. You have to hear it to believe it, and I want to talk about China and how they are interfering and basically closing the noose on all of their tech companies. Stick

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SPEAKER_01: banning US IPOs for big tech companies. This is an ongoing story. And we've got to keep talking about it. The Wall Street Journal today in an exclusive report. And here's the quote, China plans to propose new rules that would ban companies with large amounts of sensitive consumer data from going public in the US website. And that's what people familiar with the matter said. So let that sink in. We allow Tiktok

SPEAKER_08: here, which has access to people's microphones, their photo rolls, their camera, their location, and their friend graph and their phone book. We let China have all that information. China is so savvy that

SPEAKER_01: they're doing the opposite. We need to really look at China as our adversary. We are in competition with them here in the United States and the West writ large. And when we are in competition with them, you need to study your competitor and understand why they're doing what they're doing. And we need to really understand what is China's end game here? What is their goal? So if you remember on episode 1244 in July, I told you about the CAC the cyberspace

SPEAKER_08: administration of China. They issued draft rules that would halt foreign IPOs for Chinese companies collecting data from over 1 million users. Okay, 1 million users for a public company is a very low

SPEAKER_09: benchmark. I don't think there's any public company that has or under a one under 1 million users. So

SPEAKER_08: they're basically saying any company. Well, these new draft rules are coming from a different agency this time. This is the CSRC, China's Securities Regulatory Commission. And China has a lot of these

SPEAKER_01: different groups and regulatory commissions in their country and different regions operate with some level of independence. But obviously, Xi Jinping is in charge at the end of the day, and he is exerting serious power over entrepreneurs, capitalism. And I think the why is what we need to understand why is he doing this? And why now to wise. So these rules from the CSRC seem similar to the ones by the CAC. Here's a quote from the journal under the new rules, China would also establish a mechanism that requires companies to obtain formal approval from overseas IPOs from across ministry committee that would be set up in the coming months. Basically, this means they're going to close the loophole that companies like Alibaba, Didi, Tencent have used in the past, this is called the VIE variable interest entities. So according to Reuters, VIEs are ways for Chinese companies to raise money from foreign investors and list overseas, avoiding the CCP Chinese Communist Party's regulations. Always remember, China is a communist authoritarian country. Sometimes we forget that here in the West,

SPEAKER_12: because we have been in this, you know, really deep integration with them around the world. And we're building iPads and phones over there. They're taking our movies in the NBA, they bring us Amazon

SPEAKER_08: basics cables. But we're in partnership with a communist authoritarian human rights violating regime. Keep that in mind, because we've all been living in a mirage that China is heading towards democracy. They are not so from the Reuters article, the VIE structure was created two decades ago to help skirt Chinese rules restricting foreign investment in a number of sensitive industries, such as media and telecommunications. In other words, the Chinese are smart, they don't want other people owning their media channels, as opposed to us, like we have Fox, we let Rupert Murdoch buy a ton of stuff over here. We are very open as a society, we let people invest in our country for better or worse. And China is saying, Nope, we're not doing that anymore. And they are trying to control this. So from Reuters in a VIE, a Chinese company sets up an offshore company for overseas listing purposes that allows foreign investors to buy into the stock, very basic, think of it like a shell company. According to Nikkei, companies that

SPEAKER_01: have used VIEs, I don't know if they're referred to as VIEs, I'm going to say that VIEs are worth a total of 1.62 trillion. The Chinese tech policy reporter Kendra Schaefer did a tweet thread today, early this morning. And she says China CIC has also released draft regulations for algorithms. And this is really fascinating to me. And I actually think there's something to be learned here. Again, I said, you need to know about your adversary, if you're going to be in competition with them. Well, here's something where I just think they're doing something that is savvy for their society and their society, as you know, in China is based on harmony, they're going for harmony, our society in America, would you describe it as harmonious? Maybe not, maybe you would describe it as conflicted debate, vibrant debates, and competition, right? We have a slightly different idea here, in

SPEAKER_08: America that we want to compete and have winners and losers, as opposed to harmony. So algorithms are obviously if you're watching this being startups, you know, how your Facebook feed is prepared for

SPEAKER_01: you or Twitter now, which went from reverse chronological order to being produced by an algorithm things that have a lot of signal, maybe things that are outrageous lies, or conspiracy theories have a tendency to move up because they engage you more, they create rage or emotion. And that is one of the big problems we have here in the United States is rage based social media or YouTube taking people down into the intellectual dark web. Maybe you start with an, you know, simple Sam Harris, interesting video, and then you wind up at a one of the Weinstein brothers. And then all of a sudden, you're, you know, listening to Dave Rubin, or Ben Shapiro, and then you wind up on a Milo

SPEAKER_16: Yiannopoulos or, you know, some other band person who's a white supremacist giving Nazi salutes, etc.

SPEAKER_01: And so these are very challenging, because the people who write them, they write them with the goal of engagement increasing, they don't actually know how the algorithm is doing this, they just tell the algorithm, hey, the outcome we want is more time on site, YouTube just want you to watch that extra video, spend an extra two or three minutes there, and they make more money because they are advertising based businesses, if they were subscription based businesses, it wouldn't matter as much. Sure, Netflix tries to get you to watch an incremental show, but they're doing that for your enjoyment, not so that they can show you more ads. So here's the tweet from Kendra, who we should have on the program. Most interesting to me users must be provided with a convenient way to see and delete the keywords that the algorithm is using to profile them. I just noticed on Chrome, you know how they show you your news, you can actually now edit that, or at least when I was in Italy, you could do that. So that might be an EU thing. But sometimes people will let you see what the algorithm is trying to show you and let you tweak it. On YouTube, you can tweak the algorithm by saying show me more or less of this. When you hit on that little triple dot on the corner of YouTube videos, some of you may be aware of this, but we don't

SPEAKER_08: really have a lot of information on how the algorithms work because that's proprietary. And as Google always says, we don't want to tell you how the algorithm works, because then SEO people will game it to move up the rankings. In another tweet from Kendra, users must be informed that algorithms are being used to recommend content or products to them, and must be allowed to opt out and see non personalized results. This is brilliant. This is something that should exist in the United States. This is an easy regulation to come up with. When you use Facebook, you should be able to say no algorithms, just reverse chronological order, which I think they have somewhere in the menu system, actually, but it should be more prominent. And you should be able to opt out of getting personalized stuff, which we're starting to see a little bit of here in the United

SPEAKER_01: States. The CCP is also cracking down on algorithms that could influence public opinion. Think about this Facebook right wing algorithm stuff that we've been talking about over and over and over again. Or the far left, hysterical liberal mobs on Twitter, both equally, in my mind, annoying, and just loathsome and particularly annoying. The party does not want and this is Kendra speaking in her tweet, or Kendra tweeting, the party does not want algorithms running amok or influencing and influencing public opinion. The CIC will keep records of algorithms that have, in quotes, public opinion attributes, or social mobilization capabilities, public opinion attributes or social mobilization capabilities. In other

SPEAKER_12: words, my reading of that would be people can then go mobilize and, you know, protest, which is something that

SPEAKER_01: Chinese do not like. If you remember Tiananmen Square, if you're too young, type in Tiananmen Square, or you can look back on Hong Kong over the last couple years, students protesting for freedom, being run over by tanks, being

SPEAKER_12: murdered, being put in jail and tortured. That's how the CCP does business. I don't care if I ever go back to China. I think they're bad actors. And I think we need to take a hard line. I'm a China hawk. And here's Kendra wrapping up as far as I'm

SPEAKER_01: concerned. This policy marks the moment that China's tech regulation is not simply keeping pace with data regulations in the EU, but has go gone beyond them. So here we have one country, the United States, where we let tech companies run amok. And it's causing chaos in our society with misinformation, Russians, Chinese interference in elections, and particularly going after race and trying to create a lack of harmony in the United States. That's what China and Russia want to do. They want to make everybody in the United States obsessed with our two weaknesses as a country, gun control and race in reverse order. Those are the two things that Americans really have a hard time dealing with. And that's what the Chinese and Russians want us to do. They want us to fight on social media. So we're distracted while they build big industries and the technologies of the future. So on the other side, you have the Chinese now who are going to say we're in control of the algorithms, we're in control of the data somewhere in between the EU and Europe saying, let's give some more controls to the people, three different policies, one is going to result in authoritarianism, one is resulting in a vibrant free market with some unintended consequences and the middle one throttling the growth of companies while maybe

SPEAKER_12: making life a little more tenable for people in the middle. So it's like anything else. Goldilocks is porridge, too cold, too hot, maybe just right. So are these a good idea? These rules drafted by the CCP? You

SPEAKER_01: know, I kind of like the rules around the algorithms and transparency. I think that that's a big win. I don't like them having all the data. So what they're doing is saying don't trend things that could cause a protest or criticism of the CCP. That's really what they're doing. So it looks like they're trying to do this to help the individual, what they're really trying to do is maintain control. They don't want something trending about somebody, you know, being beat up or jailed by the cops. They don't want something about the Uyghurs being sterilized and tortured and forced to pick cotton for shirts that probably are being

SPEAKER_12: purchased by people in the West. Sadly, that's why they want to control trending topics, which you can

SPEAKER_01: understand if you're trying to run an authoritarian country, you don't want trending topics like we had here in the black lives movement, right? BLM was driven in large part by not just video cameras, but those videos then trending on social media, and that caused massive social change. That same thing, China is absolutely aware that that could happen. And that's what they want to stop. So there's also some other things going on here, related to the tech industry, China's Supreme People's Court, God, they've got so many of these and its Ministry of Human Resources and Social Security have ruled that their 996 schedule, at least the one in tech is going to be illegal. In other words, working 9am to 9pm six days a week is going to be illegal. Even if you have stock options, even if you want to work, even if you love your job, you're creating something that's super world positive, they're going to get rid of that. 996, as you know, is pretty controversial. Because we used to all work that in Gen X, like back in the day, that was kind of standard here in America. If you wanted to work at a tech company, you would expect it to be there on Saturday or Sunday, you're expected to get in stumble in between nine or 10 or 11 in the morning, and stay till 9 10pm at night, especially when you're doing all nighters. In fact, Zuckerberg used to do something called like a lockdown, he would lock down the company and all the developers and say, Hey, we're

SPEAKER_12: working for seven days, 20 days, 30 days on this project. And if you didn't perform and come in on weekends, I think maybe think less of you. Before we get to the ad read, I want you to go to

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SPEAKER_07: April of 2019, I wrote this founders were up against Jack Ma, and China enforcing a 72 hour

SPEAKER_01: work week 996 equals six days a week 9am to 9pm. The same exact work ethic that built America you can get on your Twitter pedestal attack Ma or you can make a plan to win. Well, here we are two years later. And I don't think we have to worry about China as directly in terms of competing against our internet companies,

SPEAKER_12: they're just not going to this tweet age poorly 996 is now illegal. So for a period of time, I do think the Chinese were a real threat here. Now I think China is going to have a civil war. I actually believe that if they're going to really not have entrepreneurs in that country building for the future, they might have some short term games where they take all their developers and put them on life extension, making super soldiers making weapons, there could be some plan here that we're not aware of. I know this sounds

SPEAKER_01: crazy conspiracy madness. But if you look at the arc of history, you can look at other authoritarian countries where an authoritarian leader kind of jumped the fence and went a little crazy. Maybe Jack Ma was too threatening to Xi Jinping. And now Xi Jinping wants to control the country. And maybe he wants to dominate the

SPEAKER_08: entire human race. And when planet Earth, this sounds crazy, I know. But there were other dictators in history who had a similar vision. And if you do not think that's possible now, you are incredibly naive, or you

SPEAKER_16: haven't watched the history channel, or both pretty interesting turn of events here. If we just

SPEAKER_01: summarize, they displaced all the billionaire founders, check. Then they started obstructing foreign listings and brought the hammer down on DD. And now DD is not going to launch in the UK, from what I understand. And they warned them to postpone their IPO. And then they didn't let people download the app anymore. Now they're telling big companies to basically not let people work overtime. And they're telling them how to handle their algorithms. How is this going to play out exactly? Hmm, seems like they're going to the state is going to own everything. This would be as if imagine if Trump or Biden went to Amazon said, Bezos is out. You know, he retired, but Bezos is out. Amazon, nobody works overtime. And since you have all this data, we now get all the data, and we kind of run it and the end. Pretty, pretty crazy stuff going on here. So let's get on to the interview. Okay, everybody. Next up on the program,

SPEAKER_00: we're going to talk a little bit about a really clever crypto idea. Now, you know, I've been a bit critical of all the scams, ICOs, speculation, market manipulation, regulatory breaking insanity in crypto over the last decade. But it really has been earmarked by or book ended by two very interesting moments. Over 10 years ago, the early true believers in the space had a really clear vision for what a decentralized, i.e. no one person in charge, a decentralized currency based infrastructure would look like, and what impact they could have, and they were kind of dreaming up ideas. And one of them was storing money store of value is a fancy way of saying just storing money. And I think about like owning gold, or maybe you own some diamonds or even cash. And then you had money transfer. Okay. Are people really using crypto to transfer money around? In some cases, speculation obviously has become a great big use case people using all kinds of different coins from real coins to ish coins as a way of gambling on the internet, or speculating on this crazy new future. Not something I'm a fan of. ICO is obviously something I'm not a fan of. But I feel like now, we're at the 10 year mark. And I said from the beginning, some interesting ideas might emerge that were run by legit people who aren't running scams. And today on the program, we have one of those individuals. His name is Roniel Rumberg, and he has a little company called Audius, as in audio plus us. Welcome to the program, Roniel. Thanks so much for having me, Jason. You heard my little preamble there. I saw you nodding along and laughing a bit. You were attracted to the crypto space starting when?

SPEAKER_38: Yeah, so my first kind of intersection with crypto was in 2012 or so. So I was a computer science student at Stanford. I was very interested in distributed systems and like kind of practical use cases for for those. So I was working at a little company called Arrow FS at that time, founded by a guy named Yuri Sagalov. So I was, you know, just the bumbling intern right at the office. And we were

SPEAKER_39: building this like kind of file, file distribution, think like a decentralized Dropbox. That was kind

SPEAKER_40: of what they were trying to build. And of course, all the engineers at the office were like obsessed

SPEAKER_38: with Bitcoin talking about it. And I was like, Oh, that's interesting. And one of my other intern friends, who's now my co founder at Audius Forrest, Forrest Browning, he and I, you know, kind of were both talking about Bitcoin at that time. We were like, Hey, you know, we we have free electricity at school, right? Like we don't get old in, in the dorms for for electricity. So what if we got some old cast off mining hardware and started to mine a bit? Right. And, you know, because we could, you know, mining hardware that was unprofitable for others to use because of the electricity cost, that cost is zero, just like, it's great. Check out the expense. Yeah, I mean, beyond the expense of the rig, I guess. Yeah. So it started out really just as a way to get beer money, right. And as I learned more, you know, I just got really excited about what this could do. And not so much to your to your intro around the financial use cases, but really around like what, what we could kind of build and have owned and operated by communities of people that otherwise used to be companies, right? You can organize people around things and make them do productive work, like in Bitcoin's case, kind of processing transactions without trusting each other. And that was kind of that core little nugget that

SPEAKER_44: I was like, Oh, that's so they never busted you for having these rigs in your, in your dorm room,

SPEAKER_47: nobody ratted you out. Oh, man. I mean, no one ratted us out. But we actually found a way. So we were

SPEAKER_38: drawing so much current, we used to blow the circuit breakers pretty often for like, our part of the floor. And then like, people would be like, Well, yeah, we don't have electricity. So we finally, you know, when the maintenance person had come to open up the little breaker box and flip it, we convinced him to just leave it unlocked so that we could turn it back on when good for him. He doesn't have to come

SPEAKER_50: back and flip it. Exactly. Yeah, every two or three days. Wow. And then other situation, nothing, nothing else. No one no one noticed. So thank the Lord, you could have got banned, it would have been an

SPEAKER_08: ethical violation. But here we go. I think you're past the statute of limitations. So the NFT craze has really taken over. I mean, the last couple of weeks have been amazing, just in terms of people's embracing this new future of collectibles online, you started working with this concept of combining NFTs and the music industry. And you talked a little bit before about communities having power versus centralized power. But when we think about centralized power, outside of finance, and maybe education, the music industry is pretty far up there, you have a small number of labels that control very large libraries, and in fact, can dictate a lot of what breaks in terms of taste. And, you know, even manufacturer stars, it would be, I guess, the most cynical way to say it. And I guess the most positive way to frame it would be, you know, they help stars reach ultimate heights and that kind of

SPEAKER_16: stuff. But tell me, what is the vision for our audience, which is spelled, by the way, for folks

SPEAKER_38: who are wondering a UDI us audience? Yeah, so so we really foresee a future where artists and fans are financially and otherwise engaging directly with one another. And direct means, you know, no company

SPEAKER_39: sitting in between them, no middleman of any kind, literally, like, you know, if you consume my content, the moment you consume it, money going into my pocket, if I've chosen to charge for that content, or, you know, if I'm monetizing in some other way, you know, that kind of interaction being instantaneous, right. And, you know, we that that future, we kind of, you know, foresaw, I guess, partly from, you know, my co founder, and I were both very, like, excited about and interested in

SPEAKER_38: crypto kind of things, right, and decentralized tech more broadly. But we also just saw so many of our favorite creators choosing to leave platforms like SoundCloud and others because they felt they were getting mistreated there. And that was was ultimately what led us to say, hey, if, if we could create a place where artists actually owned the relationships with their fans and owned that ability to distribute content, merch, everything else to them, that could be something interesting.

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SPEAKER_08: Because I've been pitched on, you know, dozens and dozens of startups that have a similar pitch of, hey, we want to be the SaaS platform for artists to be able to share their music like DistroKid and publish to platforms or to monetize like Patreon does. Why the need for NFTs or crypto in any of

SPEAKER_40: this? What does that buy you? Yeah. So this is really, we see a means to, to the end of, of the

SPEAKER_59: distribution tool chain being owned and operated by the, the very creators that make it valuable. Right? So

SPEAKER_38: um, without like a, a blockchain of, of some kind, uh, uh, we couldn't figure out from a technical perspective, how to have this kind of distribution tool chain, um, you know, not be in control of, or in the hands of, of a company, whether that's ours or someone else's. So, you know, when we say direct, you know, we, I think, uh, uh, you know, a lot of, a lot of, uh, centralized companies will also use that term, right. But it's really, you know, the money is still flowing through that company.

SPEAKER_40: That company is still in a, uh, centralized fashion, controlling that distribution. And I think there's so much scar tissue in music, um, from companies doing that, right? Like SoundCloud decided to take away, uh, their API, for example. Um, and, and, uh, all of the workflows that artists

SPEAKER_38: had built up to like distribute concert tickets, for example, to fans that were following them on SoundCloud, they just stopped working because the API went away. So, um, uh, I think it was really a trust thing, right? Um, artists felt that they didn't need to trust, you know, me or,

SPEAKER_59: or the team building this because the, that assumption wasn't baked into, uh,

SPEAKER_68: so let's, let's step back for a second, because as is the case with many crypto projects,

SPEAKER_08: we kind of almost instantly go to the 30,000 foot view and the philosophical view. Let's come back down to reality. I'm on the website right now. I see a bunch of trending songs. One of them is by my pal, Steve Aoki, and I see he's got a bunch of favorites and repost and 20,000 plays almost. And it says at the top dollar sign audio rewards top five tracks each week win dollar sign audio. So is this like a contest where if you trend, you then as audios, the project and company, then give them coins in the cryptocurrency. So it's like a video game. And does Steve Aoki have a label? And then what do they think about him selling tracks here? How does this work?

SPEAKER_40: Yeah. Yeah. So, so getting down to brass tacks, um, you know, audios looks and feels like any

SPEAKER_39: other music player, right. Um, uh, and that kind of, I think is aligned with the philosophy we've, we've put forward that, you know, crypto is, is a means to this end. It's not the reason this product exists, right. Um, uh, if there were better tools to do what we wanted to do, we wouldn't use them.

SPEAKER_38: Right. Um, and, uh, uh, I think, uh, yeah, so, so to your, to your, some of your questions specifically, um, there are kind of these, uh, rewards programs that the network runs. So like as a, as a, uh, artist sharing content on audios, if your track is, is among the trending, uh, trending tracks, which is determined by this, uh, uh, kind of like karma algorithm that, that the community

SPEAKER_39: devised, um, is that it's all open source. If, if anyone's ever curious to, to check it out. Um, uh, uh, you get these, uh, rewards on a weekly basis, if you're part of that, um, part of that group. So, um, that's not really monetization as, as such. We saw that more as, as, um, you know, uh, uh, uh, means to incentivize engagement and, you know, uh, folks like Steve have, have been very supportive of, um, of the platform. And, and yeah, I mean, today over

SPEAKER_38: five and a half million people listen to, to audios on a monthly basis and over a hundred thousand up, uh, artists have uploaded so far. So, um, I think that's, that's like the, the key

SPEAKER_39: thing here, right? Like again, that crypto is the means to the end. Um, the end here is like a new distribution tool chain for, for music. It's not, you know, crypto, whatever, whatever. Right.

SPEAKER_76: Um, and I think that's where, so in that way, it's similar to like

SPEAKER_08: distro kid or Spotify put together. You upload a song as an artist and then people can listen to it. Uh, and you have an app so people can listen to music on there, but you don't have the rights to giant, huge catalogs. This is only music that people have chosen to share on this platform,

SPEAKER_38: correct? That's exactly right. Um, so it's all been, you know, directly uploaded by artists, uh, choosing, choosing to do that. Um, there are some folks signed, uh, uh, to labels that use audios as well, but, um, you know, in those cases, like the artist went in and asked, uh, uh, the folks

SPEAKER_81: at their label, like, Hey, you know, can I, uh, can I try this thing out or put some stuff there,

SPEAKER_39: that kind of thing. So, um, so there are different ways that, um, content can, can, uh, you know,

SPEAKER_38: different permissions that certain content might need to get, I guess is a better way to put it, but, um, you know, anyone can, can come and upload, uh, uh, uh, their stuff and immediately,

SPEAKER_81: you know, distribute it to, uh, to the fans here and, you know, their fan base potentially elsewhere

SPEAKER_72: too. Do the fans buy, what do you call your coin dollar sign audio? Is it called the audio token?

SPEAKER_08: Yeah. Okay. So you buy the audio token. Do I, as a consumer buy the audio token and do something with it? Like I give it like tips, like maybe brave browser has the attention token. What is the,

SPEAKER_55: what is the device by which a user participates in the audio token?

SPEAKER_38: Yeah. So, uh, uh, the token's not, uh, not so much directed at, at fans as it is, uh, artists and then the kind of infrastructure layer of, of audience. So there's, uh, uh, you know, sort of,

SPEAKER_39: um, you know, at a very high level, there's this network of, of, uh, so-called node operators

SPEAKER_38: that host content on the network. Um, you know, think like if you, if you ran like a, a server and you wanted to earn a little bit of money from it, you could, uh, uh, run a server on the audience network and help host people's content and do other things. Um, you, uh,

SPEAKER_08: So your network is then distributed. You don't need to have servers at AWS or Azure. So all the music is hosted on this decentralized server. How many servers are

SPEAKER_59: running on the network right now? I think like 60 or 70 right now. Um, and those are actually pretty professional too. So, so you need to put up, uh, 200,000, uh, audio tokens to, to be able to run

SPEAKER_08: one of those. Uh, uh, yeah, tokens go for two 50. So for basically, uh, that means a hundred tokens

SPEAKER_68: would be worth 250 bucks. 200 tokens would be 500 bucks. So people pay you 500 bucks to put up a server

SPEAKER_97: and then they may, well, two things, they're not paying us. They can go like, uh, uh, buy those

SPEAKER_38: tokens, but it's a 200,000 tokens from anybody who's selling them. It's 200,000 tokens actually.

SPEAKER_100: So, uh, yeah, yeah, yeah. Uh, I'm looking at the audience price. It says $2 and 47 cents a token.

SPEAKER_38: Um, yeah. So, uh, uh, to be a node operator on the network, you'd need to buy 200,000 of, of those.

SPEAKER_100: So that's like, you know, what five, uh, $500,000, something like that. Why would somebody pay $500,000

SPEAKER_40: to serve your files for you? Uh, they're able to generate, uh, revenue from, from that service.

SPEAKER_38: So, uh, the network is actually paying them, uh, uh, rewards and, and, um, to, to, you know,

SPEAKER_104: basically help support that, that function. So what are the nerd, what are the nerd, what are the node operator? What are the nerds running the nodes get paid per month? I guess you had 60 of them.

SPEAKER_105: So now they have these basic franchises that they've bought into. How much do they pay?

SPEAKER_107: Yeah. So much do they make rather?

SPEAKER_38: Yeah. So it depends on how much, uh, they have, uh, kind of gotten the community to delegate to them. So let's say like, I'm, I'm a node operator. If you wanted to kind of put your tokens to work, but you didn't necessarily have the technical know-how to run a node, you could lend your tokens to me and I could kind of make my server beefier or run more servers by,

SPEAKER_39: by doing that. Um, so, uh, uh, the, the way that rewards are distributed is actually on a like per token staked basis. Um, and, uh, uh, you know, so let's say I, um, you know, I put up, uh, say a

SPEAKER_38: million tokens and, um, I, I, uh, run my node. Um, right now the reward rate for that is you'd get about 25% um, per year of additional tokens for the number of tokens that you put up. So, um, uh, and that fluctuates there's, there's, uh, actually if, if, you know, um, if anyone's curious to learn

SPEAKER_39: more, you can go to, uh, dashboard.audius.co, um, and, and you can see actually like the real-time rewards rate. You can go explore, uh, the people running nodes. You can learn all about that. Um,

SPEAKER_38: um, and, uh, uh, yeah, so I, I guess the token really powers the economy on that side. It also, as an artist, um, if you stake those tokens, you get access to additional distribution features. So there are some things that consume resources at the network level. So, um, an example of that is you

SPEAKER_39: can, uh, uh, display NFTs on your profile, um, and link out to where you can buy and sell them. So,

SPEAKER_38: uh, we have many artists who've issued NFTs and have markets around them. So they're able to aggregate all of the NFTs they've issued on say, OpenSea or, uh, Rarible or super rare, all these other platforms and put them in, in one place. So that becomes kind of their storefront, if you will.

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SPEAKER_26: your first implementation pack. That's not a joke. That's $1,000. Just go to odoo.com slash twist to check it out. That's odoo.com slash twist. So when you start the company or the project,

SPEAKER_00: you issue 400 million audio coins. And then who gets those? Do you give them to your investors? Do

SPEAKER_08: you keep them as a company and slowly sell them to fund the company? Because looking at coin market cap, which I'm not sure how accurate this is, um, it says you're the number 90, uh, cryptocurrency, uh,

SPEAKER_00: with a $990 million market cap. Now that doesn't mean $990 million have been paid for the tokens.

SPEAKER_08: It just means if you took the total tokens in circulation and times did by $2.50, that's what you get or so whatever it is. Right. Um, so how does one, you know, uh, distribute those 400 million tokens and how many of those do you own to the companies own? I'm always interested in how this moment of origin of how you make the decision on what to do with the tokens, because yeah, it's like, if you kept 300 million of them, you would have just printed $600 million plus for

SPEAKER_72: yourself. But then do people believe in the project or do you have to give them all away? How

SPEAKER_39: does it work? Yeah. So fantastic questions. And I, I think this gets at the meat of like, you know, uh, uh, this is not a company, right. And, uh, these crypto projects, I think project really is almost the right, uh, uh, term, um, because you're an incorporated company that raised

SPEAKER_38: money from Lightspeed and general catalyst to be clear. Uh, so those folks were actually purchasing

SPEAKER_122: tokens, uh, uh, the venture firms bought tokens. Yeah. So there's lots to unpack around how that

SPEAKER_124: happened and how you are, you are an LLC then, or you're a corporation in Delaware.

SPEAKER_59: So there is an LLC that those folks invested in, which was a holdings vehicle that, uh, had tokens.

SPEAKER_44: Yeah. So there is no Delaware company called audience. So there, there is. Um, and that is,

SPEAKER_38: that company is, you know, what like can, uh, enter into agreements like when we had an office and when we did things like this, but, uh, uh, uh, that organization, you know, when we, we describe it as a temporary organization that exists to help steward this network and grow it. Um, and so yeah, getting back to your question around the, the token allocation. Um, so there, there are actually a billion tokens that existed at the inception of the network, but not all of those are available to be traded or in circulation as a nice round number. Um, yeah. So, so you can see that like, uh, on, on a coin market cap or trackers like that, there's this fully diluted, uh, value. And then there's also the, um, uh, kind of like total supply number. Um, so there were a billion tokens at, at the network's, um, sort of inception, uh, and then the token supply inflates over time. So there, um, there's a 7% rate of inflation. Uh, that means 70 million new tokens minted in the first year. We're like eight months through, uh, that first year, the network launched on, um,

SPEAKER_69: on October 23rd last year. So that when you send those 70 million out every year, they're worth

SPEAKER_55: a hundred over $150 million who gets the $150 million. Yeah. Folks, uh, uh, operating nodes on

SPEAKER_69: the network or artists distributing content on the network. So, um, so they're not for sale.

Chamath Palihapitiya: You're just gifting them to the people in the project, or actually paying the people in the

SPEAKER_38: project. Yeah. Saying you there is also worth clarifying. It's actually the network on chain

SPEAKER_39: is, is doing that. So our company like, you know, uh, uh, doesn't actually kind of facilitate

SPEAKER_40: or even intervene at all in, in how that, uh, that all works. There's a set of smart contracts on chain that, um, that actually are minting. So, but you wrote the smart contracts. Yeah.

SPEAKER_38: And can you change them? No. Uh, so the community could vote to change them and they have, uh, there are, I think now like 30 or 40 governance proposals have been passed by, uh, by the community where, you know, one token is, is one vote. Um, and, uh, yeah, they, you know, they, they have, uh, full control and, and say, yeah, that's, that's why we really can credibly say like, you know, we,

SPEAKER_59: I can't pull the rug out for, I'm literally not capable of taking away, you know, the audience API, for example, or any of these things, the community would have to vote to, to make changes like that.

SPEAKER_08: So there's an opportunity for people to get some number of those 7% that are released every year, whatever number of tokens that winds up being. Um, if there's a, actually what, you know, you have a billion tokens. So seven would be 70 million a year. Is that right? Or release? Yeah, that's exactly right. 70 million will be released for the next 10 years or so.

SPEAKER_44: Oh, no, that's per year. No matter what forever. Uh, yeah, well, so, so the network design is

SPEAKER_38: actually a compounding 7% rate. So at the one year mark, it would be whatever 7% of, uh, 1.07 million

SPEAKER_39: or billion, sorry. So you can kind of compound that out. But, um, uh, but, uh, yeah, I mean, and that's, that's how, you know,

SPEAKER_55: Okay. So how much do I get paid for putting a song up there? If I put a song up there, do I just automatically get something or does it have to get listens?

SPEAKER_141: Yeah. So it needs to be listened to, um, and, and some of the, the, the structures are around how

SPEAKER_39: those kind of payouts are distributed, get, um, uh, get a little bit complicated, but it's, it's also

SPEAKER_40: dependent on how much of the token you are, uh, staking as an artist to, uh, be able to get access

SPEAKER_08: to distribution and explain to the audience, what it means for the artist to stake. We got the idea that, okay, in order to be a node, put a server on the network and be part of the distribution, you got to have whatever it is, a half million dollars in, um, tokens that you've purchased. You're saying the artist has to buy into the audience network as well in order.

SPEAKER_10: Yeah. So they can also, what does that cost them?

SPEAKER_38: Yeah. They can also earn their way in, which I think is interesting. So, so you can get started for free and, uh, uh, upload content and do stuff like that, but, uh, your rate of rewards can

SPEAKER_40: increase if you have a larger position. So the, the size of your position kind of, you know, is, is almost like self-reinforcing and self-retrenching through that, like inflationary distribution

SPEAKER_39: structure. Right. Um, uh, uh, so yeah, I mean, most of our artists, uh, uh, you know, got their initial,

SPEAKER_38: uh, uh, token ownership through, uh, when the network launched in October of last year, 50 million, uh, of those tokens were distributed to the, uh, uh, to the biggest users of, uh,

SPEAKER_39: of the network at the time is like the top 10,000, uh, uh, uh, who, you know, users.

SPEAKER_01: Is that referred to as an airdrop when you just gift people those tokens?

SPEAKER_08: Yeah. Yeah. Yeah. So you gift those people, the tokens, but it's not enough for any of them to get rich.

SPEAKER_55: It's just enough for them to splashy cashy, basically tip people for their music.

SPEAKER_38: Uh, well, it varied. So there were some, uh, uh, you know, some of the biggest folks, uh, uh, you know, who were part of that airdrop, like earned, you know, a dollar amount over, over like a hundred thousand dollars from, right. Um, yeah. So, uh, uh, so yeah, it was pretty wild and, and even more wild was seeing like some of, cause it was, it was based on how much you were engaging on audience, how much you contributed to the network, how much your content got listened to. There was this whole kind of formula thing.

SPEAKER_39: And, uh, uh, there were some folks who, you know, there, there's, uh, uh, I don't, I don't want to name his, his, uh, his name, um, because, you know, he, he's in the midst of building his artist career and he probably wouldn't want to be known for this, but, you know, he,

SPEAKER_40: he waits tables to, to get by and he made like over a hundred thousand dollars on, on, you know, in tokens on this. Um, and, uh, uh, even, even crazier, he was like, well, I'm, uh, I'm not going to sell those. I'm going to hold them, uh, uh, because I think this will be worth

SPEAKER_81: more. And you did, you did very well based on that choice. So you don't have equity in your

SPEAKER_12: company or the equity doesn't matter because it's just a, it's a shell corporation. So when you raise the 5.5 million, that goes for you to hire the developers to kind of work on the project to

SPEAKER_38: begin with. Is that right? That's exactly right. Um, so, so, uh, the company, uh, raised about 10 million dollars pre the token launch over two rounds. Um, and, uh, uh, yeah, both of those

SPEAKER_59: rounds were into, uh, into tokens. So that, how much did those people pay for making that crazy

SPEAKER_40: bet per token, a penny, a token, a dollar token. Yeah. Between two and three cents, depending on

SPEAKER_16: the way. So they're up a hundred X at this point in time on their original investment in two years.

SPEAKER_39: Uh, yeah. I mean, I, I can't, uh, uh, comment on, on, you know, the, the price and whatnot,

SPEAKER_16: but well, the price is 247 and you gave it for two cents. So yeah, it'd be a hundred X. It's just

SPEAKER_08: math. I mean, all this stuff is public, right? When we talk about this, one of the great things about talking to a crypto person is you don't have to be private about this. All this information's on the chain in public. It is. Yeah. So we would know which venture firm bought which amount of tokens in that sale. It would be, we see their wallet, right? And we'd see them buy it on the blockchain.

SPEAKER_122: Yeah, that's, that's an interesting one actually. So I think, uh, uh, it's, it's not as like obvious

SPEAKER_38: or clear on chain, uh, uh, what those large holders are doing. Um, the reason being that,

SPEAKER_40: uh, uh, for example, many custodians, so there are these professional services that hold tokens on

SPEAKER_38: behalf of others. They all like pool together tokens and they do like funky, funky kind of things. Yeah.

SPEAKER_104: So this whole idea that crypto is transparent and the blockchain is transparent gets totally

SPEAKER_08: obscurified by the fact that there are custodians who bundle this together and abstract that. So that whole concept, which was one of the powerful things, um, can also be reversed just like an LLC.

SPEAKER_52: Somebody could own a series of homes under some crazy LLC that nobody recognizes. So you can abstract

SPEAKER_40: that. Yeah. Um, which is actually, I mean, even without the custodian thing, like what if, what if I just have like 50 wallets, right? Like it's free to make more. So, so, uh, yeah,

SPEAKER_08: yeah, you can make 500, right? Like you can write exactly as a computer science person, you could write a script right now to make an unlimited number of wallets, or is there some upper cap? Yeah. Each one

SPEAKER_122: costs some money in terms of Ethereum to interact with. So there is some, you can't have like a billion,

SPEAKER_40: or something, but you could have like 10,000 plus and people actually do that, right? Like,

SPEAKER_39: uh, why would they do that? Uh, uh, folks want anonymity. They want, you know, all kinds of things. Um, I, I haven't done that. Um, I don't think, uh, most, um, so we could find your wallet. Do

SPEAKER_08: you share your wallet and what's in it? Cause I see that's like a trend amongst crypto people is

SPEAKER_40: publishing their wallet, right? It is a trend. Uh, so, you know, I, I choose not to, uh, uh, to share that just because there's sort of some, you know, operational security risk you take. Well, yeah,

SPEAKER_00: then people could hack your shit, right? So let me ask you this, when you start the company and you

SPEAKER_08: have all these coins, you're the founder, you don't get equity in a company that has a cap table. Really? I mean, I'm guessing you do, but that company is never going to get sold, right? That

SPEAKER_00: company is, is worthless, right? Is the position that, so how many, how do you decide how many coins to give yourself as the founder? Yes. That must be public information, right? Uh, that, that's not,

SPEAKER_08: uh, uh, why would it not be? Isn't the whole point of crypto to like be transparent and people to know if they're going to buy into this project, that they know how much you gifted yourself. Like what if you gifted yourself in a hypothetical situation, 80, 90% of the tokens and everybody else is like the sucker at the poker table. You control the currency. Yeah. Well, so what is public, uh,

SPEAKER_38: publicly disclosed and they're even like, I think norms have emerged in the community around what, uh, uh, kind of, you know, what folks should be transparent about. Um, uh, but you don't

SPEAKER_40: necessarily want to be going and naming, you know, so-and-so has X number of tokens because again, it becomes a security risk, right? I mean, I, I know folks who've been kidnapped, who've been extorted, who, I mean, there's just all kinds of, you know, really nasty things that you don't

SPEAKER_39: want, uh, uh, you know, to, to have, um, you know, happen, but, um, you know, in the case of Audius, uh, there's this, uh, foundation that helps steward the growth of, of the network. Um,

SPEAKER_40: uh, and that owns 20% of the token supply. So 200 million tokens, um, the early team, uh, uh, folks are own, uh, you know, and, um, I, I'd have to actually pull up the, the precise distribution in, in front of me, but it's, uh, it's also on our website and whatnot. I think it's, it's around 35,

SPEAKER_186: 37% of the, uh, uh, the full pie. So like 350, 370 million tokens, somewhere thereabouts.

SPEAKER_00: Um, so the founders and all the early employees, and, and I guess you get to pick who gets what as the founder, you distribute it like an equity cap table. Yeah. It's like a, you distribute it. Yeah. Yeah. Do they vest them or they just all get gifted them at the 0.01%.

SPEAKER_59: It's all vested. And, uh, it actually was, you know, most of those were distributed before there was like

SPEAKER_00: a price on, on the token. So like a practical question as the founder, then if you give people all that, all those tokens, and then all of a sudden it appreciates and they become a millionaire or deca millionaire, then how do you keep them working on the project? Don't they just quit and go

SPEAKER_122: to Italy and sit by a beach? It's a fascinating question. Um, and it's one that, you know, we and many other projects are grappling with as we speak, right? Um, uh, I think that is happening.

SPEAKER_08: People are just getting instantly rich and then you have to rely on them wanting to get more rich.

SPEAKER_38: Yeah. I mean, there are people who, uh, uh, you know, joined a project like audience say two years ago, right. Or two and a half years ago and, and are, you know, now like kind of in the range of what you just described. Right. So, um, those tokens still vest, right. There's a four year vest on, on

SPEAKER_40: that, uh, the company, uh, uh, or the foundation actually maintains like a repurchase right against them. Right. So, um, and then repurchase light right lapses, uh, with time, but, um, you know, there are folks who are fully vested and, and still, uh, uh, still here. And the reason for that is, you know, I mean, think about, uh, think about if like 99% of your net worth were, were one thing, what would you do? You'd want to make it valuable, right? I've been there. Yeah. You've seen me on CNBC

SPEAKER_197: talking about Uber and defending the company. Yeah. I've been there. So it creates some really

SPEAKER_61: interesting, uh, dynamics though, right? I mean, cause liquidity just happened so much earlier in

SPEAKER_40: the life of one of these things than it would in like a normal company. Right. It would be as if

SPEAKER_08: the Uber employees or SpaceX employees could just exercise their shares without needing permission for a secondary share. They could just being public on day one essentially is what it is. So, um,

SPEAKER_201: does the fact is the foundation a nonprofit? Uh, it is. I, I actually don't, I don't want to

SPEAKER_39: misspeak on the precise status of, of it. Um, so it's, it's not based in the U S. So I, I don't think

SPEAKER_204: that it's like in this wasn't the Zerg or the Zerg or whatever. Ours is in Panama, but it doesn't. Um,

SPEAKER_39: yeah, I don't, I don't know exactly what there's some, basically there's a different type of, of organization where I don't think it's tax exempt, but it is, uh, uh, they're sort of a, uh,

SPEAKER_40: separate set of, um, stewards of, of that organization. And there's some specific rules

SPEAKER_00: about how they can distribute. Cause you can't do any of this in the U S right. You can't do it in the U S because, and you don't sell tokens to people in the U S and you have like a little warning

SPEAKER_206: on your website. Hey, you can't buy these tokens. You have to be an accredited investor kind of thing. Cause people could look at them as shares as opposed to utility tokens. Uh, it's, it's actually not

SPEAKER_122: so much that as, uh, this entity structure, like a, you know, I don't, I don't think one

SPEAKER_39: of these foundations could be seen as like a bonafide 501 C three nonprofit. Um, because there is, I mean, there's an incentive to make the tokens like more, more valuable, et cetera. Right. So, um,

SPEAKER_40: I think, uh, uh, that's where the confusion kind of lies on, on that front. Um, so, so I think that's why many projects have these foundations in Switzerland, in Panama, in Singapore, there are three or four, uh, jurisdictions that I think have this, it's called a foundation actually, but I, I don't know the precise legal term for, for what, um, you know, what's the governance of

SPEAKER_76: this foundation. Uh, so there's, uh, uh, kind of a, a group of, um, of, of, uh, directors that are,

SPEAKER_40: that are basically kind of responsible for executing, uh, uh, you know, what, what is asked of them or required of them by, uh, by the network, but there's actually like a prescribed

SPEAKER_39: set of, um, kind of, uh, rules that, that govern how, you know, basically what they do. Right. So, um, uh, so yeah, it is, uh, it is not governed by like a board of directors or, or anything like that.

SPEAKER_59: Um, there's basically like this, this almost like rule set that they, uh, they have to follow.

SPEAKER_16: So basically as the founder of one of these companies, since we're on this week in startups,

SPEAKER_12: you create one of these projects, you keep a third of the tokens for 37% or whatever you said for your team and yourself to give to them as, um, a motivation to work on this. And then you sell tokens to venture capitalists and other folks in order, or maybe in an ICO, or did you offer them in

SPEAKER_16: some sort of initial coin offering or something like that? We did not. Um, the only way that you

SPEAKER_40: could, uh, uh, uh, you know, there were, there were sort of private token sales, um, uh, executed.

SPEAKER_38: And then, uh, you know, the, the token kind of, uh, when it launched, uh, uh, you know, markets started to emerge around it basically. Got it. So, so you get to choose, you get to like, say,

SPEAKER_16: oh, I want to sell 10 million tokens to this venture firm, 10 million tokens to this private

SPEAKER_55: investor, whoever you get the money for that into the foundation. The foundation then has money to pay developers to kickstart the whole thing. Yep. It's about right. Yeah. It's very different,

SPEAKER_72: right? Yeah. So weird. Yeah. So how much did the foundation sell in tokens and how much money does

SPEAKER_40: the foundation have to hire developers? Uh, so that was 20, 20 or sorry, 200 million left, like after all the private sales had, had happened. So that like $10 million that, um, that got the,

SPEAKER_39: the network to launch that happened prior. Yeah. Um, so, so, uh, the foundation actually hasn't, uh, you know, at least as far as I'm, I'm aware and I'm not, you know, I don't work for the foundation, so I don't actually, what do you work for?

SPEAKER_40: Uh, I work for there's, uh, you know, the U S company that I mentioned, which is separate.

Chamath Palihapitiya: Got it. So you created the project, but you're not on the foundation. No. Yeah. I'm not. Um, okay. I'm super confused right now.

SPEAKER_40: That's the nature of, you know, it is, it is a decentralized ecosystem, right? They're, they're actually like three or four other companies like my company that exists

SPEAKER_59: to help, uh, build audience, um, and get grants from the foundation and, and from other.

SPEAKER_222: Wow. Yeah. So how much money does the foundation have?

SPEAKER_69: Uh, they have 200 million tokens, 200 million tokens. So they got 400.

SPEAKER_72: Wow. They've got 450 million or $500 million in tokens. And some group of people who nobody knows who they are, or they're listed on your website or is there a foundation website?

SPEAKER_40: Uh, it is, uh, yeah, it's, it's, um, kind of through the, the structure. It's not disclosed publicly who, who those folks are. Um, again, there are some security concerns and whatnot.

SPEAKER_55: So there is a unknown organization in Panama, which we don't know who's on it that controls $450 million. Yep.

SPEAKER_17: That is so bizarre. And you're not on it and you created this. That's right. Yeah.

SPEAKER_12: Yeah. But you know, who's on it, but nobody can know because of security reasons.

SPEAKER_40: Well, I think there's, I mean, look, you, you just said it yourself. There's, there's a big

SPEAKER_39: bag of, uh, uh, of value that they control there. And, uh, you know, that's.

SPEAKER_228: Yeah, but Tim Cook controls more money on the planet than anybody. And we know Tim Cook's name.

SPEAKER_38: But I do think, uh, in, in crypto, there's sort of, um, there's certain controls that like the

SPEAKER_40: traditional banking system has to prevent, uh, uh, extortion issues, things like that. Um, someone like Tim Cook also has a full-time security team, right? So, uh, uh, you know,

SPEAKER_81: there's different concerns for, for folks. I mean, even like yourself, Jason, right? That you have to,

SPEAKER_16: No, I have security concerns. Yeah. But I don't get to put money in the emerging world and have no accountability for it. Everybody knows how much stock I own and S ones and those kind of

SPEAKER_08: things. So I don't get to hide it. That's the thing that I think is crazy. Like, and then the fact that you started this thing, you don't know, like, and then they make the decisions for this. It's like

SPEAKER_17: a crazy brave new world. I can't get my, my hand, my head around.

SPEAKER_38: Yeah. So I think we're, we're not alone in, in this kind of, uh, uh, structuring,

SPEAKER_40: like the Ethereum foundation, I think really did a fantastic job of like setting a standard of expectations around transparency, around operation. You know, you can, a lot of folks give them a lot of crap for how they've, you know, managed those funds and whatnot, but I think they did set the standard for what the community should expect and should look for around, uh, decentralization, right? Like, look, if I were in a position to control all of that and like all this other stuff,

SPEAKER_39: like this thing would not be decentralized, right? Like I would not, uh, uh, you know, be, uh, uh, be able to actually, you know, realize the vision that we set out for this network. Right. Um, so it

SPEAKER_12: all serves that goal. What is the 51% account, uh, you know, attack that people talk about or the being able to, you know, uh, own all the mining and then be able to, you know, vote to give yourself

SPEAKER_08: all the shares through the smart contract. This has happened with some Dow's and how does one, when you launch a project protect against that? Cause the way you're describing it, you know, you're not on the board of the foundation. There are 60 miners out there who paid to be on it. They get to vote on smart contracts to change anything. You sound like you have little control over what's going to happen in the future. So what happens if a bad actor, you know, a bunch of Russian hackers, Chinese hackers, whatever, some rich person comes in, buys out 50 nodes and then they just go, okay, you know what, we're going to have this work in a centralized way. And we want the foundation to give us all the tokens. Like, how do you stop that kind of bad actor

SPEAKER_16: situation? I know I'm making it sound crazy and it's probably not as crazy as I made it sound.

SPEAKER_38: I don't think it's that, I don't think it's that crazy. Um, cause it's, it's happened before, not with, um, kind of tokens, at least as far as I can recall, but like 51% attacks have happened

SPEAKER_40: in hash power and it's in, in principle, similar things. So, um, so yeah, I mean, I think,

SPEAKER_38: you know, what you really, there, there are two things that folks will look to, um, kind of, you know, the, the level of distribution of the, um, of the token, meaning that like, you should need a pretty large number of people to get to 51% ownership of the token. So like a large number of people would have to collude to, to misbehave, to like cause a problem, um, that reduces the risk. Uh, the other thing, like, you know, to, to your question of, you know, what if, what if, uh, uh, some, you know, really a rich person or some say institution with deep pockets decided they wanted to, uh, take, take a network like this down or, or do whatever. Or control it, co-opt it. Exactly. Yeah. What if Spotify decides like, this is a really great idea

SPEAKER_104: and it's disruptive and they have unlimited capital and they just start buying the nodes and buying

SPEAKER_16: people out and, you know, they build up the infrastructure here. Yeah. I mean, so, uh, uh,

SPEAKER_40: I think that's actually why so many of these networks have a native token. Um, it actually becomes, think about like, if you tried to buy 51% of the outstanding shares in a, in a company, like you would drive the price up so much in the process of doing that, it becomes just financially infeasible to, to do so. Right. Um, uh, even, you know, activist investors, if they try to, uh, take over a public company that will get like 5% usually before their hand is tipped, right? Like, it's just impossible to, uh, uh, to aggregate that much without like meaningfully altering the,

SPEAKER_39: the landscape of the market. And, uh, I think that's, that's kind of a, a similar thing here, right? Like for someone to actually go buy, uh, uh, 51% of the outstanding tokens, um, you know, that it, it just would, it would, it would completely, uh, uh, you know, you, you could

SPEAKER_40: think of it as like the, the, it, it would be impossible to execute that trade in like a reasonable

SPEAKER_245: way, I guess. Yeah. So if you succeed and, uh, you get, I don't know, a million artists to be

SPEAKER_00: releasing content on here and making money, what would the music industry look like in 10 years? If it had like a Bitcoin or Ethereum like run, and you went to a $10 billion market cap from a billion

SPEAKER_12: and you just had massive participation and major artists were releasing on this platform and Jay-Z

SPEAKER_16: and Beyonce and whoever were releasing songs on it. What would that look like for the world? Yeah. So, so,

SPEAKER_40: so, you know, we're, we're well on our way over a hundred thousand artists have uploaded so far.

SPEAKER_38: And, uh, yeah, I mean, some, some folks whose names, uh, people might recognize like Skrillex, Diplo, Deadmouse, uh, uh, Steve Aoki, like you said, uh, uh, Blau, RAC, like there are a lot of, you know, bigger name folks that, that you would recognize that actively, uh, actively use Audius today. Um, you know, what, what does the world look like? I think it's one where artists and fans are

SPEAKER_39: engaging, uh, financially, uh, with one another directly with no intermediaries, with no, uh, no one sitting between and controlling that relationship. Um, and I, I think that that future, right. Is one where artists can make so much more and monetize the value of their work so much better

SPEAKER_40: than they do today. Right. Um, artists today capture about 12% of the total revenue that the music industry generates. Uh, so of the $43 billion a year brought in by the entire industry, only 12% makes it to the very folks who make all the value. Right. Uh, or at least I think so. Right. So, um,

SPEAKER_39: and I don't think there's any one enemy you can point to and say, oh, you know, it's, it's the right societies or, oh, it's so-and-so that like mess this all up. Um, here's just a lot of baggage, right. It's just, uh, uh, a very, um, you know, old and legacy kind of industry, right. That, um, you know, that, that has, uh, uh, that still operates as though, you know, it costs capital

SPEAKER_40: to produce more music, right. I think like 30 years ago, if, uh, uh, you know, you were releasing a record, you had to have a factory to produce those records and a distribution network to physically send them to, to stores, right. Those at the economics of artists capturing about 12% kind of makes sense when you think about just the gargantuan amount of capital it takes to even get a record into the hands of people. And that's why I like only a few hundred artists could really be breakout successful because there's only so much retail shelf space to actually, you know, access it.

SPEAKER_39: But, uh, today, you know, the marginal cost of distributing another track is zero, right? Uh,

SPEAKER_40: that's what software did. So the industry hasn't caught up to that reality. Um, but it quickly is, um, I think even seeing the labels have remade themselves, uh, from a business model perspective

SPEAKER_76: as effectively, like kind of full service, like artists services, you know, marketing,

SPEAKER_12: marketing, touring, they've merged, they're really moving into other ones. And so somebody in the network could create their own merchandising, you know, offering. Yeah, they already are. Yeah. Oh,

SPEAKER_08: really? And then you can participate with your audio coins, or you could do a touring one. And none of this has to do with people paying in their player yet. But at some point, somebody could make a player that says, Hey, in order to listen to this group of artists, or to listen to this song in the first week, you have to pay this amount for the next month, you pay this amount. And for the next, you know, for the first year, pay this amount, and then it's free after that and create subscriptions using the coin, people can do whatever they want with this token, right? It's exactly right. Um, and yeah, they,

SPEAKER_39: they already are even, um, you know, the, the way that, uh, uh, you know, content is accessed on Audius to, to what you just said, you know, more than half of listening on the network is from

SPEAKER_40: third party interfaces. It's not from, you know, the audius.co. Um, everyone from like, video games have integrated this catalog because they get cool music for it, uh, for their game or whatever. Um, everyone from those folks to, uh, you know, there are these, uh, uh, you know, other cool music player interfaces are actually like, uh, there are a few mobile apps that are like better than the audience, uh, like official app or, or whatever, because our team didn't have the resources or the time to build a native app. Um, so it's like a react native thing and it kind of sucks. So some folks in the community took it, uh, upon themselves to say, Hey, I can make a better

SPEAKER_167: one. So I'm going to do it. What do you think about this idea of, uh, Royal as we wrap up here,

SPEAKER_16: where like you can, they're basically creating a way for artists to share ownership in their music with the fans and then participate in royalties, which was something I talked about on a previous

SPEAKER_80: podcast for like stock photography or something and having the downstream rights. What do you think

SPEAKER_40: of those ideas? Yeah. So Justin, uh, wow. One of the founders is a close friend of, uh, of mine.

SPEAKER_85: He's a big audience user too. Um, so, I mean, candidly, I, I love the idea. I think it's a fantastic way to, um, uh, uh, to be able to like, get to, you know, support your favorite artists, be part of

SPEAKER_40: their fandom. Like it's very much aligned with how we've been approaching audience. Um, the way

SPEAKER_262: I was a competitor or a contemporary. Cause are they a crypto they're blockchain too. Yeah,

SPEAKER_40: they are blockchain based. Um, I think they're not competitive with us, uh, uh, because they're,

SPEAKER_39: they're going about a similar set of problems, but in an opposite direction, right? Like we've created this kind of new music economy, um, in, and this ecosystem and community of, you know, five, uh, 5 million odd people. And, you know, it's, it's just a completely disjoint world from like the existing

SPEAKER_40: music industry. Right. Um, whereas, uh, uh, Royal I think is, is trying to go the opposite way, right? Saying, you know, how can we bridge the old world of Spotify royalties and other things that go to companies and things like this into an on chain kind of context, right? Where, uh, uh,

SPEAKER_39: you know, once those things are programmably, uh, access, uh, you know, accessible on chain,

SPEAKER_249: there's all kinds of cool stuff that you could potentially do.

SPEAKER_17: So cool, man. I really appreciate you being so honest and giving me an education and explaining

SPEAKER_00: to the audience in a very simple way, how these projects work. Uh, and you really stood up to like a hard line of questioning here, um, that no other crypto person has ever explained it. I think as well as you had to get a project off the, uh, off the, uh, ground. I would love to book you for a year from now and just check in with you about how the project is going. If that's okay with you. Let's do it. All right. Okay. Ronald, I will see you in one year exactly from today, August 26, 2022. We'll put it on the calendar and we'll see everybody next time on this week in startups. Bye bye.