Audius, a blockchain native music streaming platform, hit six million monthly active users in August and announced a partnership with TikTok. Roneil Rumburg, co-founder and CEO of Audius, talks about how Audius works, AUDIO tokenomics, the give and take of decentralization, and more. Show highlights:

  • what problems Audius is solving for creators
  • how artists are utilizing crypto to connect with fans
  • how the crypto components of Audius fit together
  • what three utilities AUDIO, the native token of Audius, offers holders
  • why Audius requires over $500K in AUDIO tokens to run a node
  • why AUDIO’s inflation rate is higher than other popular tokens like Ethereum or Bitcoin
  • which portions of Audius are centralized versus decentralized
  • where the majority of Audius’s listens come from (hint: it’s not the app)
  • how Audius has created a “password” system to make blockchain technology easier to use for non-crypto natives
  • why Audius uses both Solana and Ethereum
  • how big-name artists like Diplo found their way onto Audius
  • how Audius makes it easier to upload music to TikTok
  • what’s next for Audius

Take the annual Unchained survey! 

Hey all, the Unchained survey is out now, and we’d so appreciate it if you could give us your thoughts on how Unchained is doing and what we could do better. Plus, we’ve got some questions for you about Laura’s upcoming book launch and the articles that she’s already starting to write! Two lucky survey respondents will receive a BTC candle, which is scented with “satoshiwood, musk musk, tulip bulbs and finite minerals.” 

Head to surveymonkey.com/r/unchained2021 to fill out the survey today! 

Follow Laura on Medium! 

Hey everyone, some news: I’ve begun writing news and features again. I’m now a Medium Partner, one of a group of writers I have long admired, such as Susan Orlean, Cory Doctorow, James Surowiecki and Will Leitch, among others. You can already check out my first post, which is on my career trajectory and why I still love covering crypto six years in. To find all my writing on Medium, please follow me at Medium.com/@laurashin. 

https://youtu.be/j5tWe0vwJOc

Thank you to our sponsors!

Digital Asset Research: https://www.digitalassetresearch.com/

Ledger: https://www.ledger.com/

Crypto.com: https://crypto.onelink.me/J9Lg/unconfirmedcardearnfeb2021  

Episode Links

Roneil Rumburg

Audius

What is Audius?

TikTok + Audius Coverage

General Coverage

Transcript:

Laura Shin:

Hi, everyone. Welcome to Unchained, your no-hype resource for all things crypto. I’m your host, Laura Shin, a journalist with over two decades of experience. I started covering crypto six years ago, and as a senior editor at Forbes, was the first mainstream media reporter to cover cryptocurrency full-time. This is the September 7th, 2021 episode of Unchained. 

Crypto.com:

The Crypto.com App lets you buy, earn and spend crypto, all in one place! Earn up to 8.5% interest on your Bitcoin and 14% interest on your stablecoins – paid weekly! Download the Crypto.com App and get $25 with the code “LAURA” – link is in the description.

Ledger:

Ledger is the secure gateway to buy, exchange and grow your crypto. No need to use different platforms to manage and secure your crypto. You have one place for all your crypto needs. Visit Ledger.com and make your crypto journey easier and safer.

Digital Asset Research:

Looking for crypto market data that meets institutional standards? Digital Asset Research delivers curated and vetted crypto market data. Get crypto pricing and verified volume dating, crypt asset reference data, and token and blockchain event tracking. Learn more at digitalassetresearch.com. 

Laura Shin:

Today’s guest is Roneil Rumburg, co-founder and CEO of Audius. Welcome Roneil.

Roneil Rumburg:

Hey, Laura, thanks so much for having me.

Laura Shin:

Audius has made some headlines recently, having recently scored a deal to enable artists to directly upload their music to TikTok’s sound kit. But before we get into all the details on that, let’s start at the beginning. What is Audius?

Roneil Rumburg:

Audius is a digital streaming service that connects fans directly with artists and exclusive new music. And we really see that direct piece of the equation being the key differentiator here. But when you use Audius, it looks and feels like any other music player. You can sign up, make an account, follow your favorite artists, and start listening to their tracks without knowing anything about crypto. But of course, under the hood, the way that Audius operates couldn’t be more different from the traditional SoundCloud or Spotify or something like that. There’s a network of third-party node operators, artists, and fans that together collectively and collaboratively run this network for the benefit of the community and for their own benefit, I guess, too — in the case of the node operators. 

Laura Shin:

And at what problem is Audius solving the other music platforms have not.

Roneil Rumburg:

Where the initial inspiration for our Audius came from was my co-founder Forrest and I are just big dance music fans. We’re not native to the music industry or from the music industry, but we were native to crypto a little bit. He and I started mining Litecoin and Dogecoin and some of the other coins in 2013 or so onward. And we just started to see, I guess around 2014 and 2015, a lot of our favorite artists choosing to leave SoundCloud or getting kicked off of SoundCloud in some cases. And all this great music that we had a favorited and followed over the years started disappearing. So when we started to ask ourselves, like, why that was happening. That was really when we started to understand this broader set of issues that, at its core, I would summarize as: artists don’t know who their fans are, where their fans are, or have any ability to like engage or interact directly with them.

Like on Spotify, for example, an artist can message your fans once per year. There’s a specific email template that you have to follow. Spotify exercises some editorial control over it, and that’s it. That’s like your ability to reach your fans. You can’t like link them out to a third party merch store, for example. You can’t do you know you just very much at all with that fan base. There were all these downstream effects of artists just not controlling or having any ownership of their distribution, which included them getting de-platformed, them choosing to depart platforms like SoundCloud.. So yeah, that’s really the core problem we’re solving. It is to give artists control and access to those relationships that they have with their fans.

Laura Shin:

And so how do you do that on Audius?

Roneil Rumburg:

So it’s really by decentralizing that whole stack and toolchain. So even the question of like, what is Audius is not a simple one to answer, just because it doesn’t cleanly fit into the bucket of like, oh, it’s a a so-called DSP in music parlance, or a digital service provider. It’s also not a distributor per se. It kind of has aspects of a number of these things. But what it really looks like is a set of tools that allow an artist to build an audience and engage directly with them with no intermediaries. Our company, or any company, included, right? For the first time, there are zero parties intermediating that that interaction. This has led to like a lot of really neat emergent behavior within the network that we haven’t really seen before in other music streaming services networks.

It really does come down to us being decentralized. Even to launch like the first version of Audius in late 2019, which was not economically incentivized. It was a Testnet, but it was decentralized from day one and fully open source. So that’s what I think that among the artists community allowed this Audius network to start to build trust with them. That the rules aren’t going to change on them. This API that their whole workflow is dependent on is not going to get pulled out from under them. All of these sort of qualities that just had never been possible in music before.

Laura Shin:

And then, do you have examples of what they are doing on the platform that they can’t do on something like a Spotify?

Roneil Rumburg:

One of the coolest emergent behaviors that our community ended up deciding to double down on with some more product features is this remix competition feature. So it was actually an artist named Lido was the first one to kind of like create this behavior. He uploaded a track, and then uploaded all the constituent little pieces of audio that went into creating that track as separate tracks that he flagged as downloadable. So anyone could go download that raw audio. Then he went and posted on Instagram and told his fan base, hey, if you all remix this track using those stems that I uploaded and tag your track with just the like hashtag. I forget exactly what he did. I think it was like the name of the track or something.

He could then go search that hashtag, find everything that remixed it, and then he did Twitch stream going through and listening to them live, and giving feedback, and engaging. So it was a really, really fun. And and we were like this is so cool. Like there has to be a way to kind of better enable that. So we kind of built out like a little bit of UI for this. And then RAC, I think was the next one that ran a remix competition with this. By that time, there was actually a way to formally tag a track as being a remix of another track. And he actually ended up signing, I think, five of the tracks that remixed his track to like an official release under his label.

So these were like just fans of his, that loved RAC’s music and wanted to like just get noticed by like their favorite artist. And now some of them actually are on an official release of his, which is like, so cool. So when you break down all of those barriers that exist between artists and fans, it finally it starts to become possible to just do these like weird, neat things.

Another example that comes to mind is we’ve seen a few artists upload like works in progress of a given track. So they’ll like upload a draft, get feedback on it from the community, iterate on it, upload a new one, see how people like it, and do that a few times. And then the final release, like two or three months later, maybe makes it to a Spotify or to other other services. But the super fans that are like, I want to hear everything this person makes, and I want to engage with it and hang out, there’s no better place to be right now.

Laura Shin:

Wow. I love this. It sounds so cool. It just sounds really fun. It’s like a little DJ mixing party on the internet or something. Something that’s interesting to me about your platform is at this moment in time, I feel like people typically think of anything that brings together culture and crypto as involving NFTs. And that’s actually not the main way you’re using blockchain technology. At least I believe so based on my research. So talk a little bit more about the crypto aspects of Audius.

Roneil Rumburg:

Totally. No, you’re spot on there. The only integration of NFTs today in Audius is, as an artist, you can run like a little storefront page on your profile if you’d like to. So some artists like 3LAU and RAC have these collectibles tabs that they’ve turned on on their profile, and they just put all the NFTs they’ve minted and that they’ve owned there. So it’s kind of like this directory that links out to whatever market might exist, like OpenSea or SuperRare.  

We aren’t a native NFT platform by any means. What Audius uses blockchains plural for, and I can get into more of the technical detail around that, is effectively a coordination layer for this network.

So there are these off-chain nodes that host content, host metadata, and kind of do the work that is required to keep the network functional and alive. The way that the network is set up, our company could go away tomorrow and the vast majority of stuff here would would continue to work just fine. It’s because it’s being operated by the community. With Ethereum at the center on the node operator side, and then Solana on the content engagement side provide, are this sort of like unified source of truth for a number of questions. Like who are the nodes on the network? Are they in a healthier, valid state? And then on the content side, what is all the content in this network? Who has engaged with it? Who has the ability to update or modify it? By doing that, we can kind of like anchor trust with these small pieces of data on-chain that refer out to data being stored off-chain on these community-operated nodes.

Laura Shin:

So for the metadata, it’s just like who wrote this track or who performed it. Does that include kind of like royalties the way that a Spotify will pay you for streams? So every time it gets played, then like different people who participate in that song will get paid? How does that work?

Roneil Rumburg:

So it includes everything from the title of the track, the cover art for the track, the name of the artist, and things like that, to things like revenue splits as well. So the network doesn’t natively split revenue today, although it does allow you to define those splits within the metadata. That’s something that I think our community had always planned or wanted to build towards overtime. Even in the absence of that, there is quite a bit of like content that both independent labels have uploaded and a few of the larger players have uploaded. And basically, they handle the splits on their end right now. There’s one address that’s getting paid out royalties and then that that company can decide, hey, I need to split this however I need to, or what have you. On the metadata side is really more just like all the things that go around the audio file itself to make it have meaning or make it interesting.

Laura Shin:

And then you also have the AUDIO token. So what functions does that perform in the Audius system?

Roneil Rumburg:

That has three core functions. It secures the network. So the people who run the nodes that actually do all the work that makes the network functional. They stake the token to be able to run that node. And then they earn fees back from the network proportional to to the size of the stake and the number of nodes that they run. So one of the kind of strange things about the Audius networks needs, compared to like a lot of say layer one blockchains that have their own nodes, is that the need for storage grows forever, right? Like the more people upload, the more people engage, the more storage you need. So the way that the node infrastructure is set up, it’s not like there’s a fixed kind of processing capacity. It’s like the more nodes there are, the more can be stored, the more can be served, et cetera.

So like the crypto-economic structure has to kind of like incentivize a much larger amount of storage to be on the network, then the network actually needs that at any given time. It secures the network. The token is used in governance. From the time the token launched in October of 2020, our team was no longer capable of making any changes to the code that powers Audius. Both for the on-chain smart contracts for like engaging with content and all that good stuff. As well as in the off chain node software. Nodes actually like monitor one another to see that they’re running the most up-to-date version, and they can get slashed if they’re running too far behind and things like that. But to actually accept within the network a new version of the code as being like canonically correct, there has to be a governance vote that that happens.

It’s not one token, one vote, but one token staked within the network is able to vote. So if you just hold tokens passively, you’re not able to participate. But if you’re delegating to a node or you’re running a node yourself, you get to vote on how this goes. 

Then the third pillar there is feature access. So as an artist, if you hold and stake some number of tokens, you get access to additional distribution features that may consume more resources at the network level. So the NFT feature is actually one of those. So if you hold more than a hundred AUDIO tokens on your Audius account, you’re able to set up that collectibles tab and connect external wallets and stuff. The reason for that limitation actually is that it costs the network resources to go index all those wallets and basically keep track of all the changes of any holding of NFTs or things like that they have.

Those are the three primary functions. I think the the one misconception that I always like to clear up around this, though, is the AUDIO token is not used for payments within the network, right? So users aren’t purchasing this to consume content or things like that. We talked to many, many, many artists about this as we were kind of working through the testnet. Artists want food and shelter. When they are charging for access to their music, conflating like control of the means of distribution with like their basic needs to like function as a human being in the world, I think is a very dangerous sort of game. Based on all of that feedback, the intent with a lot of that design was to separate these things.

To to say your ability to control your distribution should not come in direct conflict with your ability to feed yourself and support yourself. Mixing them creates some kind of weird dynamics, where the artists that are say selling what they earn to support themselves, that means they’re losing control of the distribution that they’re making valuable. Which is, we felt, not the right sort of incentive structure to create.

Laura Shin:

So then are they earning stablecoins?

Roneil Rumburg:

Monetization and Audius is not fully live right now. So there are folks that are earning in stablecoins, in like very ad hoc ways. So on Audius, every user has a wallet. They’re able to receive anything to that wallet they might please. There’s kind of this like ad hoc economy that’s emerged around that. Just because there are so many people now on the network that have these wallets. The more formal features on monetization are still, I think, being iterated on and worked on by the community. The first goal was always to build a meaningful enough audience within the network before it actually started to make sense for someone to think about monetizing it. And for the first time, I think in the last three or four months, there are some accounts on Audius with tens of thousands of followers, like 20,000-40,000.

For the first time became enough that someone could think about, fey, if 2%-5% of my audience might convert to a paid engagement, like a paid subscription to me, or something like that. That’s now like a real amount of money for that, right? Like 300-600 people engaging on something like that could really move the needle. You’d be surprised how many artists actually, just because of how little they earn for the most part, on traditional streaming services.

Laura Shin:

I have some friends who are musicians and it’s not pretty. One thing I wanted to ask about was for the staking, I realized that because of the price of the AUDIO token, that at the moment it would cost half a million dollars to become one of those node operators that can stake. I think compared to, I’m just trying to remember what the dollar amount was when staking launch on the beacon chain on ETH 2.0, I think it was like $16,000 or something. But I was wondering, is there a reason why it’s so much more? Are you going after some kind of like professional operation? What’s the thinking behind that level? Or is it just that you didn’t anticipate the price would go up this much? 

Roneil Rumburg:

The level was intentional. Although, if we could go back and redo history, something that varied a little bit more with the current market dynamic, rather than being a fixed number, would likely make more sense. But the barrier to entry here was intentionally very high. And the reason for that i: to run a node on the Audius network and have it be able to meet the minimum specification and requirement for a node, is pretty expensive. It’s not a straightforward thing to do. And it requires a level of expertise today that’s not broadly accessible yet. So that’s actually why there’s a separation between you can delegate tokens and you can delegate as little as a hundred tokens at a time.

So there’s a much, much longer tail of people, delegating tokens to people who run nodes professionally. The goal was for the folks operating nodes to be like really professional hosting businesses. The other side of this that is worth touching upon is that, because those node operators are professional, real, legitimate hosting businesses, there’s some responsibility that comes as a node operator with respect to the content that gets stored on your node. So if someone uploads something that they don’t own the rights to, for example, as a note operator, you are responsible for like when kind of rights holders file DMCA notices and things like that, to respond to them. I think that’s something worth calling out. 

Decentralization does not need to mean like mass sort of infringement of rights. That’s why that’s why the incentives around the network were structured this way. The node operator archetype that is on Audius — someone who has a level of resources that you just mentioned, to be able to come along here has no interest in hosting things that draw like the wrong kind of attention. That’s actually why the Audius has not really had run ins or issues on that front. Our goal with designing this network was to help artists get paid more. Not to defraud them or to take away their livelihood through people putting stuff that isn’t paying the right person. 

It was really those two aspects, right? It’s like the complexity of running a node, and to be able to provide a high quality of user experience and service to end-users that are fetching content from those nodes. Just the nature of like music that attracts some not so great behavior. We wanted the people who were running nodes to be like known, named businesses or individuals, that actually like have a presence and exist in the real world. Both decentralization and kind of decentralized control can go hand in hand with respecting the rights of content.

Laura Shin:

I love it. I think that’s just really cool and smart. So a couple of things. So first of all, just for listeners who don’t know what a DMCA takedown is, if I remember correctly, it’s something like the digital millennium copyright act. I’ve sent these out before, where like someone stole my writing and I was like, you need to take that down. So I think that’s great that you are seeking these professional operators who would abide by the law if they were to receive a request like that. And it’s interesting that you just raised this issue. I was going to ask you, like I noticed two years ago, The Verge wrote an article calling your service a copyright nightmare and said it was at that time full of pirated material. And the truth is, actually, when I first started learning about it, I was like, oh, it’s like Napster with a token. Is it just because basically all the node operators are kind of more centralized that they’re handling it. It sounds like it’s not even really been an issue. So are you noticing that these node operators aren’t even getting people uploading pirated stuff?

Roneil Rumburg:

Great questions all around. So there definitely are things getting uploaded to Audius that shouldn’t be, in the same way that they do to YouTube or to SoundCloud or to really anywhere. If you give users the ability to upload things, like there will be some small number of people that sort of misbehave. The reason it’s not become an issue, though more broadly, is that whenever rights holders have approached operators in the network and in the community, at least the feedback we’ve heard, is that 100% of the time, those things have been addressed in a timely fashion. So I think one thing that is really unfortunate right, is sometimes there are folks who write, produce content on the internet, but don’t necessarily fully understand the mechanics of what they’re writing about.

I think that that specific press piece — there were just a lot of things that, unfortunately, I think that reporter got a little bit wrong about the actual situation with respect to the network. Right. If that narrative were true, there would have been a lot more anger and lawsuits, and who knows what else, that would have started flying around from the broader music community. But I think we’ve been fairly warmly embraced by the broader music community. And I think it’s because we took this approach that I just described to you. By being decentralized, but still aligning incentives around positive behavior, you can I think get the best of both worlds here, right?

Like don’t have to trust our company when using Audius. But there is still there are laws and rules that exist for good reason. Allowing people to hide behind the shields of anonymity, in some cases, like you might be able to, if the requirements were much lower or much smaller. I think we felt that would lead to a misalignment around those incentives. We want all the folks who run nodes on the Audius network, which today there I think like 60 or 70 nodes, those should all be known quantities in the world.

Laura Shin:

A couple other things I want to ask about this. So one thing is, and I think I might already know the answer to this, but I did notice that the AUDIO token is set to inflate at a rate of 7% a year. And I was wondering, as I’m sure you’re well aware, a lot of people in the crypto community like coins that have caps or low inflation. But I was curious to hear about why you’re inflating at a somewhat high rate.

Roneil Rumburg:

We felt that it made more sense to distribute the token supply over a very long period of time to the community members that were creating the most value in the ecosystem. That effectively meant that rather than distributing like a very, very large amount of tokens upfront when the network launched, by basically having that happen for perpetuity, that would lead to a better kind of distribution of power and control in the community. A lot of the design around the Audius was sort of inspired by a lot of the ideals that Carl Marx and some of those early philosophers around like sort of capitalist economic structure laid out that, like it should be possible for folks who make a use of capital to earn some of that capital back over time from the work that they do.

For that to be possible, there needs to be some amount of inflation perpetually. But the way that the staking side of the Audius is set up, if you stake and actively participate with your tokens, your percentage of control of the broader network doesn’t get diluted over time. As it stands right now, you actually, by staking, you can grow your percentage of ownership over time just by function of the participation in staking. What it basically means is the network heavily disincentivizes passive holding and incentivizes active participation, right. Because if you just hold those tokens and do nothing with them, you get diluted down at an aggressive rate over time.

One of the interesting things is that like about designing these sort of crypto-economic systems is that we could sit in a room and try and do the best we can, but ultimately, once it’s out in the world, it is in the hands of the community. The decisions that our team made prior to launching the network are now only changeable by the community. All of what I just said aside, there is a growing contingent within the Audius ecosystem that wants to change that inflation rate, I think, for the reason that you just laid out. So it will be interesting to see how that plays out. This is the community’s property and the world’s property. At least I personally would be supportive of whatever they decide here. But that was at least the initial intent here, was that over time the network should be controlled by the people who are actively using it, not by kind of like passive holders of that capital.

Laura Shin:

Hmm. All right. So a moment, we’re going to talk a little bit more about the decentralized and centralized aspects of running crypto networks, but first, a quick word from the sponsors who make this show possible. 

Crypto.com:

With over 10 Million users, Crypto.com is the easiest place to buy and sell over 90 cryptocurrencies. Download the Crypto.com App now and get $25 with the code: “LAURA.” If you’re a Hodler, Crypto.com Earn pays industry-leading interest rates on over 30 coins, including Bitcoin, at up to 8.5% interest and up to 14% interest on your stablecoins. When it’s time to spend your crypto, nothing beats the Crypto.com Visa Card, which pays you up to 8% back instantly and gives you a 100% rebate for your Netflix, Spotify, and Amazon Prime subscriptions. There are no annual or monthly fees to worry about! Download the Crypto.com App and get $25 when using the code “LAURA” – link is in the description.

Ledger:

Ledger is the secure gateway to buy, exchange and grow your crypto.

What you need is a Ledger hardware wallet, which combined with the Ledger Live app, gives you access to all your favorite crypto services & DApps from one place. All that with the best security.

No need to use different platforms to manage and secure your crypto. You have one place for all your crypto needs.

Visit Ledger.com and make your crypto journey easier and safer.

Digital Asset Research:

Looking for crypto market data that meets institutional standards? Digital Asset Research delivers curated and vetted crypto market data. Get crypto pricing and verified volume dating, crypt asset reference data, and token and blockchain event tracking. Learn more at a digitalassetresearch.com. 

Laura Shin:

Back to my conversation with Roneil. So we were just talking about how you started as a centralized service, and now governance is in the hand of your token holders. And so I was so curious, earlier today when I had trouble logging into the app, I was wondering, because apps are typically run by centralized services, and I sent you a message saying, oh, hey I’m having trouble logging in, and you said, oh, I’m going to ask the team. So I was wondering, is that a centralized company that you were referring to there? And is it a centralized company that’s running this app on the decentralized protocol? Because like Ethereum has this foundation and the foundation funds these different teams working on different clients or whatever. I mean, it can be outside companies too. I was kind of curious, like what is centralized in Audius and what is decentralized?

Roneil Rumburg:

So there is a Audius foundation that controls the kind of like the projects treasury and allocates those funds out to companies like my company. So there are a few other companies that now exist in the Audius ecosystem as well, that get similar kind of grants from from the foundation. But specifically to your question, and for everyone’s context, this was around Twitter OAuth. So there’s a mechanism that Audius uses to kind of prevent name squatters from registering verified usernames on other platforms. The network will prevent you from registering a handle that is verified on Twitter or Instagram. So when Laura tried to sign up with her verified Twitter handle, the front end was like, you can’t do that or whatever.

That is one aspect of the network’s behavior that is centralized today. And there are a couple of others that I can mention, but it’s not possible to authenticate with Twitter in a decentralized way. However, your wallet when using Audius is still custodied with you. So your account is actually controlled by you. The only aspect of that flow that our company is able to affect is adding that checkmark next to your name. The only way that that happens is if a user either during sign-up or afterwards is able to authenticate with a verified account on another platform. It is a trade-off of usability versus decentralization. There are strategies that people use around this, like Keybase will have people tweet like a message like I’m setting up my Keybase, but I mean, let’s be real here, right?

Like if Steve Aoki signs up for Audius, and both of them use Audius, are they really going to tweet: “I am setting up my Audius account and proving that I’m verified” — like probably not. 

So a trade-off had to be made there. There are a couple of other places where kind of like day-to-day engagement with with the network touches some centralized services. So, for example, if you send AUDIO tokens from your wallet, even though your wallet has custody and control of those tokens and the signature around the transactions happening on your browser, we have a relay that will pay the gas for that transaction on your behalf. So you could still transact if you put Ethereum into your wallet to send it, but the vast majority of our users don’t know or understand things about crypto.

So I think where we’ve tried to make these trade-offs is with the goal of usability in mind. But with a hard bright line around the network’s functionality cannot be dependent on us as a central party. So Laura, like you still could sign up for an account. You just wouldn’t be verified, for example. Like if our company was not doing that little verification service, for example. Similarly, you could still send and engage with the tokens within the product, but the usability around it would be degraded. That’s kind of how we went about it. Those were really the two primary things that are centralized right now.

Laura Shin:

So when you said that you were going to ask your team, that was the centralized company that you were asking. When you say there are other companies that are working on Audius, the protocol, then would there be cases where we might end up with more than one Audius app or more than one Audius website?

Roneil Rumburg:

I’m nodding for everyone listening. This isn’t I think as broadly known or people were always shocked when I tell them this: the majority of listening on Audius doesn’t come from the Audius product. I think there are over 50 apps now that exist in the ecosystem, some of which are dedicated music players, but many of them are just random other things. Someone made this Music Racing game, which is super fun. I would recommend everyone try it. You’re in our race car following a track, and there are obstacles in the track that are synchronized with the beat of the music. So you sort of like steer around them, or you can get these like bonuses by hitting them. 

Laura Shin:

Is it only for select songs, or is it like some kind of algorithm, so you can do it to any song?

Roneil Rumburg:

Algorithmic. You can do it to any song. There are over half a million tracks on Audius. So this developer was like, I’ve always wanted to make this game, but I never had enough like tracks to do it with fun. Anyone can build their own Audius app. There are even institutional players in the music ecosystem that want to build customized streaming experiences, for example. Or some artists are wanting to build a fan club structure around their streaming kind of front on Audius. It’s a really neat ecosystem that’s kind of sprung up around this. The cool thing here is because like any programmatic interaction that happens with the network, from the core app that our team puts out, can be replicated by or even co-opted by any third party product too, right? There’s no special permissioning or something. And when you use the Audius app on your phone, your phone is actually going and talking directly to nodes on the network. There’s no interaction happening with with our company for like normal use of the product. Outside of the couple of exceptions that I mentioned.

Laura Shin:

Yeah, it’s like MyEtherWallet or MyCrypto.

Roneil Rumburg:

Exactly. Right. Those apps are able to talk directly to Ethereum and do what they need.

Laura Shin:

So it’s funny actually, that we’re ending on this note, because my next question is really relatable to MEW and MyCrypto thing. So when signing up for the service, it also sends an email to the user saying Audius cannot reset your password. I’m sure this is ultra confusing for non-crypto people. I understood what you were saying, but I should just point out right underneath that, is a big button saying, reset my password, or reset your password or whatever. So I was curious, like, so I didn’t click it because I was like this is an emergency button and I’m not in an emergency, so I’m not going to click this right now. But I was curious, like if I were to click it, what would happen? I’m assuming it’s not something that goes through your company. I have no idea, what goes on at that point?

Roneil Rumburg:

What you were interacting with is this kind of novel account management solution that our team developed called a Hedgehog, which is sort of a reference or homage to a there’s this parable of the fox and the hedgehog. The Fox is quick and agile and can do many, many different things. Whereas the hedgehog is only really good at like becoming a ball and then it’s spiky and predators can’t get it. Right. What we were trying to say with the parable there is like MetaMask is this amazing swiss army knife. But for an end-user, it’s very difficult to set up and use. Whereas this Hedgehog solution is like dead simple from a user’s perspective, but it makes a significant number of trade-offs that may or may not make it make sense in other applications, but we felt around Audius, it made sense.

So long story short, what it does, is when you sign up for an Audius, you put in a username and password in the app either on your phone or on desktop. And then your browser is actually using that input to encrypt a locally generated entropy that is secure to your wallet, basically. So there’s a locally-generated private key encrypted locally with that data. And then that encrypted blob is actually what gets emailed to you. That email that you get is actually a self-contained likeability to recover your account. It’s not even password reset per se, because you can just reencrypt the same wallet with a different thing. But we actually were able to set up a mail relay service with no logs enabled and no retention of the messages that it sends. So basically that mail relay is your browser, at the time you sign up, sends your key to this mail relay, which sends it to your email, and then that’s effectively the backup of your private key, is in that email. So it’s literally like embedded in the link that when you click that button could let you recover your account. Like if you forget your password, basically. Calling it password reset was a misnomer. We actually have tried three or four different sets of verbiage on that button. But all of them confused users more than this one, which is why we kept it there. Even though it’s not resetting your password, right. You can just set a new password on the same on the same information. People just got so confused by it.

Laura Shin:

I would suggest that the email say something like Audius the company, cannot reset your password. You can reset it yourself using this button or something. To say Audius can’t reset it and then right underneath is a button saying reset it. I think just like from user experience — I’m not an expert on these things, so you don’t have to take my advice.

Roneil Rumburg:

You’re absolutely right. I think it just shows how challenging usability in crypto still is, right? The fact that like the basic questions of how do you access your account don’t have like, well accepted solutions that the whole world follows is like, it’s also so cool. Cause it means that we’re all like still you’re still super early to this, if you’re listening to this. Thinking about questions like this. We need to do better as a community, right? 

Audius today as over 6 million people listening every month and over a hundred thousand artists have uploaded. We do feel strongly that like, it would never have been possible to get to this level of usage without making some trade offs. I think we can all agree that storing a private key in your email is not like a super secure way to do that. But we also go to great lengths to instruct users not to store any meaningful amount of funds in their Audius wallet. And then there’s also a mechanism to connect third-party wallets. So you can connect a MetaMask wallet as well. You can connect a like a number of others, anything that’s like wallet connectable. There’s trade-offs, I think, with all of these things. But I am very proud of the work that our community has done to try to make this accessible to a broader Audius because the majority of users of Audius today have no idea there’s any crypto there, which is pretty cool. They just want to come listen to cool music and hang out with their friends.

Laura Shin:

Yeah. And I have a bunch of questions for you about building a crypto product for non-crypto people. But just because this is a crypto show, I do want to ask one question, because this is something I think my audience cares about for whatever reason, you know how tribal crypto can be. So obviously Solana and Ethereum, I think for a lot of people are seen as somewhat competitive, and you’ve kind of embraced both. And I was curious like why that is, and just as a builder, what you thought Ethereum was good for what Solana was good for, et cetera?

Roneil Rumburg:

At a super high level, I think this tribalism is really damaging, unfortunately. These are tools, right? Like the hammer tribe doesn’t get mad at the mallet tribe because the one is slightly better at some things and one is slightly better at other things. They are just tools — but money is involved. I wish it could be that purely straightforward as I just put it. That genuinely is, how I as a builder in the ecosystem, think about it. These are tools. They are built for a purpose, and you can use them for various purposes. And with that aside, I’ll give the feedback that’s probably going to get me flamed by both sides afterwards.

I think the network effect around Ethereum is just so powerful. That’s the first community in crypto that like I really became part of and got excited about. Prior to Audius, I was a full-time investor at Kleiner Perkins. What really got me excited about crypto more broadly was this ability to program like anything with it. I like Bitcoin, I thought it was cool. Ethereum in my mind, just especially as a software engineer, thinking about it, just opened up this whole world of really cool stuff you can make. The network effect around that persists, right. Everything from you know the ecosystem around tokens and wallets and everything.

The moment that the Audius network launched, it was supported by like hundreds or even thousands of third-party applications, without any of them asking us or us asking them to do anything. Like it just happened.

Solana, by contrast, rather than trying to be everything to everyone took the approach of being really, really, really damn fast and good at a specific set of use cases, which so happens to overlap really, really well with what Audius needs, as well as it overlaps with some things like the Serum DEX and other things. From a usability perspective, Solana lets us confirm things to users far, far faster. It lets us just do much more. The average Audius user never actually touches Ethereum, right.

If 6 million people were touching Ethereum every month from the Audius, I think we would we would be creating a lot of problems for the ecosystem. We would also probably be costing like tens of millions or hundreds of millions of dollars in gas. So I think what I love about Solana is that by being focused. By saying we’re not going to try and be everything to everyone, but we’re going to be really, really, really great for the people who need a significant amount of scale or have usability constraints that Ethereum can’t serve — it’s a fantastic solution for that. I think they both have a place in this world. As do many other tools. 

Keep in mind, these are tools. And different tools can be good at different things.

Laura Shin:

Now let’s talk about the user growth because I do think, as you said, it’s not obvious at all when you go to this website or the app that it’s a crypto project. I would be curious to hear from your perspective, how did you get the community to grow to the point where you now have more than 6 million monthly users?

Roneil Rumburg:

I think the credit all lies with with that very community. Our little project team that built the first version of Audius and now has a much more diminished role in the ecosystem, just given the size and the scope of all of the various work that’s going on, that the foundation supports and other things. For our little team of 20 people to be supporting 6 million users just would never have been possible without the community’s embrace and support and active work being done to do that. I’ve been explaining this a lot to a traditional tech people lately.

As I mentioned, that’s the world that I kind of came from before working on Audius. People were just shocked when they hear that our team is so tiny. And we’re not that tiny compared to other crypto projects. Like everyone here listening knows that. But when the community is effectively the marketing team, the hosting team, and infrastructure team, they are like an extended developer team. There are more community people building with Audius than there are like people at my company. You can do so much more by opening up those flood gates.

Laura Shin:

Were there any pivotal moments? Were there kind of like bursts of new users that came to the platform? 

Roneil Rumburg:

I can just talk quickly through like our history. The product launched publicly in September of 2019. And that was in like an incentivized testnet capacity. From 2019 to like mid 2020, or so, we grew in these little fits and starts, but were mostly going sideways. The thing that was growing was the base of content uploaded to the network. Content doesn’t go away. As new users come, they upload more content. Content can grow linearly, even if usage is like flat over time. In retrospect, I don’t think we realized this at the time, but there was an inflection point that the network hit around 80,000 to 100,000 tracks. Where there was enough music here that when a random user showed up from the dance community, which was really where our early bread and butter in terms of usage was, they would find stuff that they liked.

Then they would engage, and they would stay and do more. Around August or so of 2020 was really when we saw those metric all kind of shift in lockstep. And my only guess as to why that happened was because there was like enough content here. In August of 2020, there were around I think a 100,000 to 120,000 monthly users on Audius. Today they’re over 6 million. It hasn’t been that long since then. I think it’s just when a viral feedback loop around a kind of network driven product starts to work, it has this runaway effect. It’s self-reinforcing. If more content increases user engagement and retention, the increased user engagement and retention means more artists see that and say, oh, there’s an audience here, and I want to serve them. Which leads to more content. It’s this virtuous cycle that is self perpetuating, but it’s like really hard to get started. The analogy I like to give people is to think about pushing a rock up a hill, and at some point, you crest the hill, and the rock starts rolling away, and then you’re just chasing it and doing the best you can to catch up with it. Because it goes faster and faster as it goes down. The community has been able to scale the level of support and work that they do for one another in a way that like our company never could have. I think that’s what allowed us to grow so quickly.

If we had been a centralized company that controlled all this infrastructure control all of this — even the cost of hosting all of this, let alone the cost of like just basic customer support, people ask questions all the time and stuff — we would need to be like hundreds of people that service the amount of demand that exists here. I do think the community owned aspect of the network allowed growth to multiply and to reinforce itself. But ultimately it’s just the nature of a network that led to this. It was just crossing over some critical mass or a tipping point, however you wanna describe it at some point, just things clicked and started working.

Laura Shin:

And so for the big-name artists on the platform, like Skrillex or Diplo, how did that happen? Did they just hear about it through word of mouth, or did you approach them directly? How do you get these artists with this level of name recognition and join?

Roneil Rumburg:

I’ll talk about those three and then talk about like artists more broadly. So Deadmau5 was actually one of our earliest supporters at Audius. We started talking to his team in late 2018. We got in touch with him and his team. He had specifically been looking for something around this. I mean, actually one of the early theses, like when we were thinking about Audius, was really looking at like what Tidal did or tried to do early on, which was to say, we’re going to make all of the artists that use Tidal owners of Tidal. They literally went in like issued stock warrants to those early artists on Tidal.

That was the early kind of target list that we went after, because we took a lot of inspiration from that. I think they fumbled a lot of things along the way. I’m hopeful that under new ownership, they can find their footing and find their way to is some cool stuff. But Deadmau5, Joel, was one of the earliest supporters of Tidal. When our little email intro crossed over their plate, they kind of had pattern recognized, oh, we’ve seen this before, and this is interesting. We want to learn more. So yeah, he was an interesting case. 

Skrillex and Diplo are more kind of the typical case, which is a mix of us messaging them for months and years or whatever. And then eventually they hear about it from enough of their own community of fans, as well as other artists that they follow. There’s a lot of neat content has broken out on Audius or like has been shared on Audius exclusively or for the first time. So a lot of folks were just forced to start engaging in and hanging out on the platform, not necessarily uploading their own stuff, but just to like, stay on top of what trends are emerging. And this has always been like niche by niche, and those niches aggregate and slowly roll up to larger and larger audiences. 

One of the earliest niches that got really excited about Audius was this Jersey Club community which is like a specific — they have a specific sound of music that they produce. There are a few really influential and notable folks in that community that kind of anchor it. And a few of those really early folks just happened to come across like some press we got around the product launch in 2019, and we’re like, oh, this is school we’re going to try it. And that was enough to get the whole community on. those people retained and engaged really, really well. For a Diplo or a Skrillex, I think the sentiment that needs to exist for them to want to engage with a new product is that enough of their peers and enough of their fans are already there. We slowly rolled up to that. And today, most of our work artist advocacy is just fielding inbound, which the tables have turned very dramatically.

We stopped being able to do outreach. But in the early days, like I would just sit in DM and cold email people and be like, please try this. Today things are — we just couldn’t keep keep doing that, given the scale that we are at. We are even starting to rely on the community more to educate one another and advocate this more broadly and more publicly. So our artist advocacy work today is really focused on helping the Audius appeal to new and different types of music creators and music listeners. As I mentioned, our early user basis has been mostly dance musicians. There are a lot more folks in hip hop coming on now, and Latin music is the other area we’ve seen a ton of growth more recently.

And a lot of that has been driven by — I think those communities being functionally similar in a lot of ways to the way dance communities are. It’s less top down structured, organized content and much more this like grassroots thing, where things emerge from this diaspora of crazy things happening. Audius is much more well suited to the grassroots, bottoms up sort of approach than the very top-down, institutionalized content kind of approach.

Laura Shin:

So it’s kind of amazing we went this far without getting into the TikTok deal. We have to do that now because we’re already over time. So Audius was selected as TikTok’s partner to enable song transfers on the platform. What does that mean, and why is this such a big deal? 

Roneil Rumburg:

Just setting some context to kick us off. It’s actually not very easy to upload audio into TikTok. You’d be surprised the ways that people do it. How do you get like an audio file, like an MP3 file or something, onto your phone? People will email it to themselves. Then put it into the files app on iOS. And then depending on your permissions, TikTok may or may not be able to access it. It’s actually not very simple. To a point that there are artists in our community that will hold their phone up to their laptop and like play the track and record it into TikTok, because it’s easier to do that than to go through this this.

So what the Audius integration enables is a solution to this problem. In Audius, on any track that you yourself uploaded, there’s a one-click shared a TikTok button. And if you click that the content gets pushed into your TikTok account. If you’re using the Audius mobile app, and then assuming that you have TikTokinstalled, it just opens TikTok and pushes the content over. The reason that’s exciting for the Audius network and community is that it now, for the first time, it lets artists kind of draw on the Audius that they have on Tik Tok. There are some folks in the Audius like Wookie, for example, and Dylan Francis is another one. I mean there are people who have millions of followers on TikTok that haven’t been able to monetize very well to date. They now have a chance to kind of start to draw some of that audience over to Audius because the sound, when it’s in TikTok actually shows as, oh, it came from a Audius

We actually, even as a result of that, there’s been a significant kind of uptick in usage metrics, just from people seeing those sounds starting to float around on TikTok. On the TikTok side of things. I think the reason they were excited about this was it just it made it easier for artists to upload stuff. And it’s also worth saying, we’re not the only application that has that functionality. Some other sort of like audio production tools have this natively as well. But we are the first streaming service to have it. So I think for the average creator, this has been a much lower kind of friction way to get content into TikTok.

Laura Shin:

Obviously, Audius doesn’t have the artist space or even anywhere near the number of songs that like a Spotify or Apple Music has. And I did read you have close contacts, I guess, at TikTok. But I’m sure also you must’ve had something in your pitch that they found compelling. Or maybe it doesn’t matter to them, the number of songs that are available. Do you have a sense of what it was that appealed to them about choosing a platform that really is still so much smaller than these other ones that could have been selected?

Roneil Rumburg:

I think a couple of things there. I don’t think this is like a mutually exclusive sort of a thing, right? Like TikTok is within their rights to enable other platforms to do it too. However, I don’t think Spotify, for example, has the rights to redistribute content that’s in Spotify. So a lot of folks don’t realize this. For everyone listening, you actually can’t upload things to Spotify yourself. If you’re a musician, you have to sign up for a third-party distributor service, give them your content, and they push it into Spotify. So it would actually be the distributors kind of role to, to push it into TikTok as well, not Spotify’s. All that said, who knows, maybe they will strike some new licensing structure that allows them to do that.

In the case of Audius, the user who uploads and manages the account has the full control of that content. That’s why only the person who uploaded it is able to actually push it into TikTok. That’s the equivalent of them doing a drag and drop upload directly to TikTok. It just so happens that TikTok doesn’t really have a good a good user experience or workflow around that. I kind of referenced this earlier, like Audius is some parts distributor, some parts streaming service, there’s no other like hybrid kind of approach that covers both sides.

Laura Shin:

Because it’s just a flatter structure. That’s fascinating actually. There’s so many things about how crypto networks will change business models that I find really fascinating, but this is like a prime example. So we’re well over time, but I just want to ask what’s next for the Audius. So what do you have up and coming over the next several months?

Roneil Rumburg:

So there’s so much coming up. And so much that I don’t even know is coming up because there were like just people in the community working on cool stuff. The things that I’m personally most excited about, at least, are monetization tools being much more fleshed out over the coming months. There is a lot of interesting stuff in the pipeline that will help artists better understand and segment their audience. A lot of artists today just don’t really have good answers to basic questions, like who are my fans? How do they find my content? Stuff like that. So all of that raw data exists in the Audius right now, but you need tools to be able to explore it and understand it. So really excited about that as well. 

I think you’re gonna continue to see more and more artists in new and different genres or areas of music onboarding and getting excited. The best time is yesterday, but the next best time is today to get started on a new platform and building a new following. You don’t have to be a musician to use Audius. There’s actually a very robust sort of curator ecosystem as well. So if you want to help make playlists, if you want to help curate content by reposting and engaging with it there, there’s a whole kind of ecosystem of folks on that side as well. So I think we’re just going to see more of all of that, I guess. But yeah, the concrete features I mentioned are things that I’m super excited about it.

Laura Shin:

Great. Well, this has been so fun. Where can people learn more about you and the Audius?

Roneil Rumburg:

You can learn more about Audius at audius.org or audius.co. So Audius.org is the information put out by the foundation. Audius.Co is the company that I work on, and there’s a a user experience there that lets you play with the product and engage. Go follow follow the project on Twitter. It’s @audiusproject. That’s where all the best news and updates about the network can be found.

Laura Shin:

Perfect. Well, thank you so much for coming on Unchained. Thanks so much for joining us today to learn more about Roneil and Audius, check out the show notes for this episode. Unchained is produced by me, Laura Shin, with help from Anthony Yoon, Daniel Nuss, and Mark Murdock. Thanks for listening.