Analysis

Gareth Emery of blockchain music startup Choon: ‘We’re committed to radical transparency’


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We’ve seen a few blockchain-music startups in our time, but Choon is the first one named after what you might shout at the DJ when feeling over-excited and emotional in a club.

That’s a world that the startup’s founder Gareth Emery knows well, mind. His career has seen him crack the top 10 twice in DJ Mag’s annual Top 100 ranking of DJs, while also releasing his own material, running a label and producing podcasts.

Oh, and immersing himself in the world of cryptocurrencies. “I first got in to bitcoin back in 2013. It was originally a diversion activity when I was finishing my second artist album,” he tells Music Ally.

“It was that stage where, in the last 20% of work completing your record, you’ll do anything you can to avoid working on it! I’d have 10-hour studio sessions booked, and would spend five hours reading about bitcoins and trading them…”

Like many people early in to bitcoin, Emery wasn’t looking to get rich. Fresh from an over-complicated house purchase, he was excited by the idea of a new decentralised, peer-to-peer payments system.

“I was one of the people who wanted it to become electronic cash, where you’d go and buy your Starbucks or whatever with it. That didn’t happen, but I kept an eye on it, and when Ethereum came out, that completely revitalised my interest.”

Ethereum is based on blockchain technology, like bitcoin, but is modelled as an open software platform for developers to build applications on, rather than a P2P electronic-cash system. And it’s Ethereum that provides the base for Choon, which is about to launch in beta.

Emery summarises Choon as a music-streaming service with its own digital-payments system built in: tokens called ‘Notes’ which artists earn for usage of their work, but which can also be owned, traded and spent by fans and investors.

“I’ve been at the music-industry coalface for nearly 20 years, and I’ve seen the transitions from vinyl and CD through to downloads and streaming. But I feel we’ve never properly found a way to distribute music online in a way that was fair to the people making it,” he says.

“Almost all of the solutions we’ve got are bolted on to this existing legacy system of processing royalties that is completely not fit-for-purpose. It goes back to the days of sheet music! So I felt we needed to create a new system completely from scratch.”

Hence Choon, which you can think of as a blockchain-based cross between SoundCloud and Bandcamp, in the sense that independent artists upload their music to make it available to an audience online, but then receive royalties back based on an 80% revenue share deal.

The idea is that the platform will also enable artists to sell downloads, tickets and merchandise, as well as to stream private concerts and accept tips from fans.

In terms of the streaming, Choon will use ‘smart contracts’ to split those royalties out between artists and their collaborators. However, like other blockchain startups, that’s meant some restrictions: for now, only truly independent artists can sign up to use it.

“Initially everybody we’re taking on completely owns their music. No record label, no publishers, no collecting societies. We don’t believe in giving artist royalties to anybody other than the artist themselves,” says Emery.

There’s some nuance to this: he adds that Choon has been looking at ways it can work with rightsholders, with some labels already having approached the company to see how they can get their catalogues onto the service.

“If a label goes ‘Hey, we’d like to publish our catalogue on here and create smart record contracts that will immediately divide the Notes between us and the artists’, we’re talking to a few labels about getting that up and running,” says Emery.

“If they’re saying ‘We’d like to put the catalogue on here, but we own the catalogue, so we’ll claim the artists’ Notes and give it back to them down the line’? That’s the behaviour we don’t want to engage with.”

“We’d love to have people on who are signed to copyright societies, as long as they can find a way to opt out. We’re not anti any of these agencies or other organisations, other than that they try to hold on to artists’ money. So at the start we’re completely independent, but we’re looking at ways where we can collaborate.”

How does this launch policy restrict who’ll be making their music available through Choon? Emery is clearly in, and he names Finnish artist Darude (of ‘Sandstorm’ fame) and Canadian star Datsik as two prominent examples among the 500+ artists who’ve signed up pre-launch.

RAC, who released his latest album through blockchain startup Ujo Music, is on Choon’s advisory board, as (on a non-artist level) is former Gracenote, MOG and Beats Music exec David Hyman.

The Notes tokens are one of the most interesting things about Choon: one of the better fleshed-out visions for how a token can be used within a music-streaming service that we’ve seen.

Over the first five years of Choon, there’ll be a total supply of 80m Notes, with half of them distributed to artists over those five years at the rate of 21,917 Notes a day, divided pro rata according to artists’ share of total streams on the platform.

The system is modelled on the way bitcoin developed: people in the early days could ‘mine’ lots of bitcoins, but over time the ‘difficulty level’ was raised considerably. Here, the ‘mining’ is done by artists uploading their music to Choon.

Here’s how the company’s white paper explains it:

“The streaming as mining protocol heavily benefits early adopters (as with any cryptocurrency mining operation) but it also brings with it huge incentives for those adopters to spread the word, becoming de-facto promoters for the service. Initially, early adopting musicians will amass huge numbers of Notes given the small numbers of users on the service and the relative easiness of ‘mining’.

However, rather than keeping these benefits to themselves, they should be incentivised to spread the word to larger artists: for whilst larger artists do indeed increase the difficulty level, the publicity they bring to the service should increase the overall value of Notes, therefore increasing the value of the early adopters’ stacks. This mechanism should continue to work from the first adopters to the last: with each new wave of users encouraging the next to join up, knowing that as more artists join the service, the larger the streamable catalog becomes, and the more listeners will sign up. We believe this cycle will propel Choon from beta to critical mass organically.”

“We wanted it to be an ecosystem where Notes can flow in multiple different directions, rather than just ‘You are the customer, we are the company, you will pay money and we will give you music’,” explains Emery.

“The bulk of the currency will go to the artists, but we also want to do things like compensating playlist curators. If you make a popular playlist, you’ll get a cut of that, assuming the artists are happy with that. And that will be handled by smart contracts: artists will be asked if they’ll allow their tracks to go in playlists where the curator gets a cut.”

Artists might also spend their Notes on promoting their music on Choon: in essence, paying fans to give their tracks a try. Emery also floats the idea of ‘smart remix contracts’ where artists will allow their tracks to be remixed, but with the royalty splits coded in, and the remixers able to earn Notes from streams of the results.

“There are a bunch of ways we think this can be used in a cool way, because these smart record contracts are created on Ethereum. Some of the most innovative ways will be thought of by artists themselves,” says Emery.

“But we’re committed to radical transparency. Everybody will be paid for streams at exactly the same rate, based on that daily pro-rata calculation from what’s in the pot, plus anything we’ve brought in via streaming packages.”

“Our daily distribution will be completely transparent: here’s the amount of notes distributed, and here’s who got them.”

There’s an interesting sentence early on in Choon’s white paper: “Choon does not rely on lofty theories, projected technological advances, or hopeful changes in consumer behaviour”. The company is explicitly defining itself against some of the blockchain startups and lucrative ICOs that have been drawing the attention of financial regulators, and the scepticism of potential investors.

Emery stresses the point made in the white paper, explaining that he spent a year before beginning Choon immersing himself in other startups’ white papers and initial coin offerings – although he says he’s not invested in any now for potential-conflict reasons.

“I found that so many blockchain products would be these theoretical things, relying on some future technological developments that might not happen. There was a lack of real products that people could use,” he says.

“90% of ICO-backed projects which have been raising money over the last year and a half have no working product! You’ve got companies that have raised hundreds of millions of dollars – and given the inflation of Ethereum, potentially billions these days – who have just not delivered any form of product.”

Choon, he says, has been entirely oriented towards delivering something real, which works with existing technology. That’s why the company is launching its service before holding its token sale in the spring of this year.

“We’re fundamentally uncomfortable about raising money based on saying ‘here’s what we’re going to do’. The community take those kind of statements with a pinch of salt,” he says.

“We’re looking at the end of March or early April, but if the go-live date of the platform goes back, the token sale will go back as well. We’d rather people judge us on what we’ve actually created.”

That’s an admirable approach, although that’s not to say that Choon has some big challenges ahead, if it’s going to deliver on its ambitions. The Notes tokens are part of that: if they only have a value within Choon itself, there’s a question over how appealing they’ll be to artists as a royalties currency.

The white paper refers to “exporting them to an exchange to ‘cash out’ into fiat currency” – but that requires them to be listed on a cryptocurrency exchange first, which can be a difficult and expensive thing to achieve.

There’s also the question of the collecting societies, who’ll expect to be paid (in dollars, pounds etc) for any works under their umbrellas that find their way on to a platform like Choon – an artist may not be signed to a PRO for their own songs, but if they cover a song by a writer who is, trouble starts brewing.

This is not to write the company off, but more to outline the tasks facing any new blockchain-based music service: some of which are rooted in the specifics of the crypto world, and others of which stem from the music industry’s structures – even if you’re aiming to sit outside them.

Emery is determined to make Choon a success, though, and one that doesn’t simply apply to people in the cryptocurrency world, as some blockchain startups have seemed to.

“We don’t want to build something just for the crypto community,” he says. “We want to build something for the music community at large.”

Stuart Dredge

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