Audius: Building Spotify On Chain | Ray Jacobson (Audius)

Introduction to Audius

Audius is a groundbreaking project in the music industry, aiming to revolutionize how artists and fans interact through blockchain technology. In this episode of Unlayered, Ray Jacobson, CTO at Audius, discusses the platform's vision, its innovative features, and how it's tackling some of the most pressing issues in the music streaming world. Audius is not just another music streaming service; it's a decentralized music marketplace built on blockchain technology, offering a unique approach to music distribution and monetization.

Ray Jacobson's Journey into Crypto

Ray Jacobson's journey into the world of cryptocurrency and blockchain technology is an interesting one. Prior to joining Audius in 2019, Jacobson was working on machine learning projects as an ML engineer. His transition to Audius was driven by a fascination with building interfaces rather than models. Jacobson was captivated by the idea of creating something on top of blockchain technology where the blockchain itself wasn't the product. This technology-agnostic approach aligned perfectly with Audius' vision of leveraging blockchain to transform the music industry without making the technology itself the focus for end-users.

The Problem Audius is Solving

Audius is addressing several key issues in the current music industry landscape. The primary problem it aims to solve is the disconnect between artists and fans, which has been exacerbated by traditional streaming platforms. Jacobson explains:

"What Audius is and kind of the pithy one liner phrase is a decentralized music marketplace. And of course in that it's built on chain with decentralization principles first and foremost. And what that does is it allows us to create really an economically incentivized environment for music to thrive."

By leveraging blockchain technology, Audius creates an open and transparent platform that allows for direct interactions between artists and fans. This approach aims to reduce the distance between creators and consumers, which has become increasingly pronounced on platforms like Spotify and Apple Music.

The Vision of Audius

The long-term vision for Audius is to become an open book clearing house model for the music industry. Jacobson emphasizes that the internet is a free and open protocol, and Audius aims to bring this same level of openness to the music industry. The platform seeks to eliminate the black boxes of knowledge that currently exist between artists, fans, and other stakeholders in the industry.

Audius aims to provide a more transparent and efficient system for music distribution and monetization. For instance, when a user listens to a track on Audius, the process of payment and rights management is handled openly and transparently through the blockchain, in contrast to the opaque systems used by traditional streaming platforms.

Audius as a Music Layer 1

One of the most intriguing aspects of Audius is its position as a "music Layer 1" platform. Jacobson explains:

"What's really interesting today is you can almost think of Audius as both an app that we've built but also a layer one for music protocol where anyone can build any kind of experience on top of it."

This approach allows developers to create a wide range of applications and experiences on top of the Audius protocol, fostering innovation and diversity in the music ecosystem. By providing this open infrastructure, Audius is enabling a new generation of music-focused applications and services.

Monetization on Audius

Audius offers a variety of monetization options for artists, moving beyond the traditional streaming model. The platform supports direct payments for streaming or downloading tracks, NFT-gated content, and tip-based systems. Jacobson highlights the flexibility of the platform:

"We think that there is some economic efficiency to gain by having this be a totally openly operated network."

This approach allows artists to experiment with different monetization strategies, from selling individual tracks to offering subscription-based fan clubs or even creating unique experiences tied to NFT ownership.

The Social Aspect of Audius

Unlike many traditional streaming platforms, Audius places a strong emphasis on social interactions. The platform incorporates features like end-to-end encrypted, fully decentralized direct messaging, allowing artists to communicate directly with their fans. This social aspect is baked into both the Audius protocol and its first-party client application.

Jacobson believes that in the current era of music creation, where AI and new tools have made it easier than ever to produce high-quality recordings, the relationship between fans and artists becomes increasingly important. Audius aims to facilitate and strengthen these connections through its social features.

Audius and AI-Generated Music

The rise of AI-generated music presents both challenges and opportunities for the music industry. Audius is taking a proactive approach to this trend, offering features that allow artists to embrace AI-generated content while maintaining control over their work. Jacobson explains:

"We recognize then we launched a feature with an audience that allows you as a profile owner on audience for through your account to just go to your settings page and configure your profile to allow derivative works that are AI generated."

This feature allows artists to set permissions for AI-generated derivative works, potentially opening up new avenues for collaboration and creativity while ensuring proper attribution and compensation.

The Advantages of Blockchain in Music Rights Management

One of the key advantages of using blockchain technology in the music industry is the transparent and immutable record it provides for rights management. Jacobson draws a parallel between Audius and the DeFi (Decentralized Finance) revolution:

"If you think about the comparison between what DeFi is to the traditional finance space, you can kind of almost think about audience to the, you know, trad music space if you want to call it that where it's kind of like there, there are all of these things going on behind the scenes in traditional finance that become transparent."

This transparency can help resolve rights disputes and ensure fair compensation for artists, as every transaction and rights agreement is recorded on the blockchain for anyone to verify.

Audius vs. Traditional Streaming Platforms

While Audius shares some similarities with traditional streaming platforms like Spotify, there are significant differences in its approach and underlying technology. Jacobson emphasizes that Audius is not just trying to replicate the existing streaming model:

"What we think we can really do is open that up and allow people to build really anything on top of it and do so in a way where it infraits as artists because it puts them in control of actually how they monetize."

Instead of a one-size-fits-all subscription model, Audius allows for a diverse range of monetization strategies, from selling individual tracks to offering unique experiences tied to NFT ownership.

The Importance of User Experience

Despite its focus on blockchain technology, Audius places a strong emphasis on user experience. Jacobson stresses that the underlying technology should be invisible to the average user:

"We care a lot about the user experience and we care about it in such a way where really shouldn't matter to the end user like what this is built on, whether it's blockchain, whether it's crypto, it doesn't, you know, it's a music experience."

This focus on UX is crucial for Audius to compete with established platforms and attract users who may not be familiar with blockchain technology.

Audius and NFTs

While NFTs (Non-Fungible Tokens) have been a hot topic in the crypto world, Audius takes a more measured approach to their implementation. Jacobson explains that Audius refers to NFTs as "collectibles" to better communicate their purpose to users. He acknowledges that while NFTs haven't reached their full potential in the music industry yet, there's still significant opportunity for growth and innovation in this area.

The Future of Music Collectibles

Jacobson believes that digital collectibles, including NFTs, will play an important role in the future of music fandom. He points out the recent resurgence in physical media sales, such as vinyl and even CDs, as evidence of fans' desire for deeper connections with their favorite artists:

"There's clearly an interest in music. It's crazy. I heard that sat and I was like, 'Why am I kind of blown?' There's definitely this thirst for a deep interaction with music that's beyond what streaming is providing today."

Audius aims to facilitate this deeper connection through digital collectibles, offering unique experiences and access to content for fans who own these items.

Audius' Approach to Music Rights

One of the biggest challenges in the music industry is navigating the complex web of rights and licenses. Audius is actively working to become the first fully licensed crypto music project. Jacobson explains:

"Audius, you know, on the parallel for all this is working with a lot of industry partners to become the first fully licensed, you know, crypto music project that's ever exists."

This approach aims to ensure that Audius can offer a wide range of content while properly compensating rights holders and complying with industry regulations.

The Role of Smart Contracts in Royalty Payments

Audius utilizes smart contracts to manage royalty payments, ensuring transparent and efficient distribution of funds. Payments on the platform are primarily made in USDC on the Solana blockchain. Jacobson describes the system:

"We have a smart contract program that is quite simple. And actually we have this program audited by Neo Diamond. I think the first thing they said to us was like, are you sure this needs to be a program?"

This system allows for instant, transparent payments to be made to multiple parties based on predefined splits, addressing one of the major pain points in the traditional music industry where royalty payments can be delayed for months or even years.

Audius' Transition to Solana

Audius made headlines in the crypto world when it became one of the first prominent projects to transition from Ethereum to Solana. Jacobson explains that this move was driven by the need for better scalability and user experience:

"When I came on the scene, we were close with the early operation there. Trying to figure out, okay, if Ethereum isn't going to scale to the level that it will be able to track every single time someone plays a track on Audius, we're north of 3, 400,000 of these a day, there's no way you could push that to Ethereum."

The move to Solana allowed Audius to handle the high volume of transactions required for a music streaming platform while keeping costs low and transaction speeds high.

The Hybrid Blockchain Approach

Interestingly, Audius doesn't rely solely on Solana. The platform uses a hybrid approach, leveraging both Ethereum and Solana for different aspects of its operations. Jacobson explains:

"We decided, hey, we can leave some of the core functionality protocol on Ethereum that doesn't need this feed and doesn't need the throughput. It doesn't need these UX guarantees. That's not how it can give us, but let's also figure out how to bridge it."

This hybrid approach allows Audius to leverage the strengths of both blockchains, using Ethereum for less frequent, high-value operations and Solana for high-frequency, low-cost transactions.

Building on Top of Audius

As a "music Layer 1" platform, Audius encourages developers to build applications on top of its protocol. Jacobson mentions several examples of applications that have already been built on Audius:

"One of my favorites was one of the early builders on audience is this app called Bass Booster which just cranks up the bass on anything you're listening to. And that is an app that was streaming on audience early. We've seen a lot of games. That's been pretty cool. Even some Xbox games where they have background music and use audience catalog to power some of that."

Jacobson also expresses enthusiasm for seeing more monetization-focused applications built on top of Audius, leveraging the platform's built-in payment and rights management features.

The Potential for Music NFTs

While acknowledging that music NFTs haven't taken off to the extent that some predicted, Jacobson remains optimistic about their potential. He sees NFTs as part of a broader trend towards digital collectibles in the music industry:

"I think that collectibles in the digital sense are absolutely going to be a part of that and they will continue to be a part of that. I just don't think that in their current form this concept of an audio non-fungible token is necessarily the answer to that."

Jacobson believes that as the technology and use cases evolve, digital collectibles will play an increasingly important role in connecting artists and fans.

Audius' Integration with Other Platforms

Audius is actively working on integrating its platform with other services and websites. Jacobson mentions an ongoing proposal to add frame support for audio playback on Farcaster, a decentralized social media platform. This integration strategy aims to make Audius content more accessible across the web, similar to how YouTube videos can be embedded on various websites.

The Vision for a Music Marketplace

Audius aims to become more than just a streaming platform; it aspires to be a comprehensive music marketplace. Jacobson explains:

"We talk about being a music marketplace. That is a killer feature of a decentralized music marketplace. If you can empower people to basically have whatever flavored storefront they want to have on top of music or merchandise that's physical and digital that's tied to music."

This vision includes enabling artists to create customized storefronts where they can sell not just music, but also merchandise, experiences, and other products related to their brand.

The Changing Landscape of Music Genres

Jacobson notes that the very concept of music genres is evolving rapidly in the digital age:

"What genre even means today is radically different from what it meant 10 years ago and from 20 years ago, certainly. And you know, I think we're going to see all sorts of, you know, new genres, new types of music, new ways of reaching fans and all it may be it's not even, you know, music."

This evolving landscape presents both challenges and opportunities for platforms like Audius, which aims to be flexible enough to accommodate new forms of audio content and artist-fan interactions.

The Role of AI in Music Creation

The rise of AI in music creation is a topic that Audius is closely watching. While the platform doesn't take a stance on whether AI-generated music should or shouldn't be allowed, it provides tools for artists to manage how their work can be used in AI-generated content. This approach allows Audius to remain neutral while still providing value to artists who want to engage with AI technology.

The Importance of Community in Music

Audius places a strong emphasis on community building within its platform. Jacobson notes that many artists who started their careers on Audius have grown beyond the platform, which he sees as a positive development:

"We're seeing over time artists who got started on audience or used audience early as like a toolkit to like really propel their career and then take it like a step further."

This community-driven approach is reminiscent of how platforms like SoundCloud helped launch the careers of artists like Chance the Rapper.

The Future of Music Consumption

Looking to the future, Jacobson believes that the way people consume music will continue to evolve:

"Music is inherently different today than it was 10 years ago and 10 years from now is going to be radically different from it the way it is today."

Audius aims to be at the forefront of this evolution, providing a platform that can adapt to new trends and technologies in the music industry.

Audius' Approach to Content Moderation

While Audius provides an open platform for artists, it also has to consider content moderation. Jacobson explains that the platform tries to remain neutral on what constitutes music:

"We really don't take a stance in like what is fair game and, you know, maybe a white noise track is actually like really interesting because it helps people sleep and they're going to actually like pay $50 a month for it."

This open approach allows for a diverse range of content on the platform, potentially including non-traditional audio experiences.

The Potential for Remix Culture on Audius

One of the successful features on Audius has been its support for remix competitions. Jacobson explains:

"One of the most successful features that we've had on audience for the longest time is the ability to host remax competitions. And that that's really interesting because you can take a track that's been out for, you know, ages and re-release the stems for it and, you know, call to arms all the content creators that exist now because the internet has made so many people like, you know, producer literate to like go take those stems and remix them and create new tracks."

This feature not only engages the community but also breathes new life into existing tracks, creating new value for both artists and fans.

The Role of Blockchain in Ensuring Transparency

One of the key advantages of building Audius on blockchain technology is the transparency it provides. Every transaction, rights agreement, and interaction on the platform is recorded on the blockchain, creating an immutable and public record. This transparency can help resolve disputes, ensure fair compensation, and build trust between artists and fans.

Audius' Vision for the Future of Music

As Audius continues to grow and evolve, its vision for the future of music becomes clearer. The platform aims to create a more open, transparent, and artist-friendly ecosystem where creators have more control over their work and how it's monetized. By leveraging blockchain technology and focusing on user experience, Audius is positioning itself at the forefront of the next generation of music platforms.

In conclusion, Audius represents a bold attempt to reshape the music industry using blockchain technology. While challenges remain, the platform's innovative approach to music distribution, artist-fan interactions, and monetization offers a glimpse into what the future of the music industry could look like. As the platform continues to evolve and attract more artists and users, it will be fascinating to see how Audius and similar projects influence the broader music ecosystem.

Facts + Figures

• Audius has over 4 million monthly active users
• The platform processes over 300,000-400,000 track plays per day
• Audius uses both Ethereum and Solana blockchains in a hybrid approach
• Payments on Audius are primarily made in USDC on the Solana blockchain
• Audius supports end-to-end encrypted, fully decentralized direct messaging
• The platform allows artists to configure their profiles to permit AI-generated derivative works
• Audius is working towards becoming the first fully licensed crypto music project
• The platform uses smart contracts for transparent and efficient royalty payments
• Audius has partnered with companies like Coinflow and Stripe for fiat on-ramps
• The platform supports various monetization methods, including direct payments, NFT-gated content, and tip-based systems
• Audius has an Unreal Engine plugin for integrating music into games
• The platform has worked with artists like Grimes on innovative AI music projects
• Audius uses a technology similar to IPFS and Arweave for decentralized storage of music files
• The platform is exploring integration with other services, including a proposal for Farcaster frame support
• Audius aims to provide a Shopify-like experience for artists to create custom storefronts
• The platform has seen success with its remix competition feature

Questions Answered

What is Audius?

Audius is a decentralized music marketplace built on blockchain technology. It aims to bring artists and fans closer together by creating an open and transparent platform for music streaming, distribution, and monetization. Audius leverages blockchain to create a more efficient and fair ecosystem for all participants in the music industry.

How does Audius differ from traditional streaming platforms like Spotify?

Audius differs from traditional streaming platforms in several key ways. Firstly, it uses blockchain technology to ensure transparency in rights management and royalty payments. Secondly, it offers more diverse monetization options for artists, including direct payments, NFT-gated content, and tip-based systems. Lastly, Audius places a strong emphasis on social features and community building, allowing for more direct interaction between artists and fans.

What blockchains does Audius use?

Audius uses a hybrid approach, leveraging both Ethereum and Solana blockchains. The platform uses Ethereum for less frequent, high-value operations such as staking and governance, while Solana is used for high-frequency, low-cost transactions like tracking plays and processing payments. This hybrid approach allows Audius to benefit from the strengths of both blockchains.

How does Audius handle royalty payments?

Audius uses smart contracts on the Solana blockchain to manage royalty payments. When a payment is made, it's split according to predefined ratios set by the content creator. These splits are recorded on-chain, ensuring transparency and allowing for instant, efficient distribution of funds to all relevant parties. This system aims to address the delays and opacity often associated with traditional royalty payment systems.

What is Audius' stance on AI-generated music?

Audius takes a neutral stance on AI-generated music but provides tools for artists to manage how their work can be used in AI-generated content. The platform allows artists to configure their profiles to permit or restrict AI-generated derivative works. This approach allows Audius to accommodate the growing trend of AI in music creation while giving artists control over their intellectual property.

How can developers build on top of Audius?

Audius positions itself as a "music Layer 1" platform, providing an open infrastructure for developers to build various music-related applications. Developers can use Audius' APIs and SDKs to create apps that leverage the platform's catalog, payment systems, and social features. Examples of applications built on Audius include audio enhancement tools, games with integrated music, and custom playback experiences.

What are the social features of Audius?

Audius incorporates several social features to foster community and artist-fan interactions. These include end-to-end encrypted, fully decentralized direct messaging, allowing artists to communicate directly with their fans. The platform also supports features like remix competitions, which encourage community engagement and creativity. These social aspects are integral to Audius' vision of creating a more connected music ecosystem.

How does Audius approach content moderation?

Audius takes a relatively open approach to content moderation. The platform doesn't strictly define what constitutes music, allowing for a diverse range of audio content. This approach enables artists to experiment with non-traditional formats and potentially monetize content that might not fit on conventional streaming platforms. However, Audius still works within legal frameworks and industry standards to ensure compliance and protect rights holders.

What is the future vision for Audius?

Audius envisions becoming a comprehensive music marketplace that goes beyond just streaming. The platform aims to empower artists to create customized storefronts where they can sell music, merchandise, experiences, and other products related to their brand. Audius also seeks to be at the forefront of evolving trends in music consumption, creation, and artist-fan interactions, adapting to new technologies and changing user preferences in the music industry.

How does Audius handle user onboarding for those unfamiliar with cryptocurrency?

Audius focuses on providing a seamless user experience that doesn't require knowledge of blockchain or cryptocurrency. The platform allows users to sign up with a traditional username and password, abstracting away the complexity of wallet creation and management. Audius also partners with fiat on-ramp providers like Coinflow and Stripe, allowing users to make payments using traditional currencies. This approach aims to make the platform accessible to a wide audience, regardless of their familiarity with crypto technology.