Past, Present and Future of Audius, the Decentralized Music Platform Disrupting Traditional Distribution | Conversation with Co-Founder and CEO

19 min read

screenshot of Roneil Rumberg and Ben Hor

Recently Ben Hor from Coingecko interviewed Roneil Rumberg, CEO of Audius, about the company, it’s history, how it works and their plans for the future.

This transcript is has been edited to remove the ums, ahs, repetitions etc to make it easier to read. The link to the YouTube video is at the bottom of the article.

Roneil Rumburg (RR)

Audios is a music discovery service in a community that’s fully decentralized. There’s a network of node operators, artists and fans that together actually cooperatively run this commons of distribution for the benefit of the folks using it. The reason why it’s fully decentralized is that this is kind of the ultimate endgame of that as an artist if you can distribute directly to fans, engage directly with them, get the data back from their engagement everything else the economics of engaging with them become a lot more favorable but so too does, you know there’s no one controlling that access right, in the way that it is today, long story short direct engagement is really what we see the key unlock of Audius being to help artists take control back of their distribution stack and ultimately to make more money in the process.

Ben Hor (BH), Coingeko Analyst

Hello everyone, my name is Ben and as usual I’m the host of today’s podcast. Today we have Roneil Rumburg, the co-founder and CEO of Audius, a music / decentralized streaming platform. Welcome to the show Roneil.

RR) Thank you for having me, excited to be here

Mining for Beer Money

BH) So before we begin, tell us a little bit about yourself and how did you get started in crypto?

RR) I got started in crypto in 2012, 2013 somewhere there abouts, mining actually. So me and some friends started to mine. At that time it was these Scrypt coins, Bitcoin mining had already sort of centralized into like, you know, ASIC farms and whatnot, commodity hardware couldn’t really mine effectively then but you could still use commodity hardware to mine like Dogecoin and Litecoin and there are lots of different, oh man I can’t even remember all of them like Namecoin and anyway there are all these different tokens you can mine. There were even these so-called coin switching mining pools where you could point your Scrypt miner at the pool and it would switch between mining different Scrypt altcoins depending on what was most profitable to mine at the time and it would immediately cash out the mining rewards to Bitcoin and then send Bitcoin to you which is kind of nice.

So yeah, I did that for a bit just as a way to earn beer money and then started to ask “I wonder what these things actually do?” and started to learn more about it and that was how I kind of fell down the rabbit hole. I guess I was well positioned to be interested in it because I was very excited by distributed system sort of problems that was what I was studying in school and spending time on and so ended up by just being, like it just kind hit me upside the head and I was like, oh this is just super interesting. I went to spend more time on it so I kind of started working in the space.

I actually met TM and Bobby from Coingecko around that time in 2014 when one of my friends from that friend group and I started working on a little Bitcoin wallet product, think like kind of a Venmo for Bitcoin like a social layer on top of a wallet product so he and I were at Stanford together we had both been mining in that group and we’re like oh we both have a bunch of Bitcoin wouldn’t it be nice if we could send that Bitcoin to each other more easily and do it on mobile. So that was the thesis of the product and yeah it didn’t end up working out we grew to like 25 000 monthly users and couldn’t really figure out how to grow past that so wound it down. Spent a few years at the venture firm Kleiner Perkins from 2015 to 2017. I was covering crypto for them but I kind of got the itch to go back to building stuff so I ended up leaving in 2017 and that that ended up leading into Audius.

Getting the Balance Right

BH) I kind of already hinted about what Audius is, which is a decentralized music streaming platform, but could you tell us a little bit more about why you started this and also, I guess, one of the main reasons why people always ask is how does it solve the existing issues within the music industry.

RR) I’ll start with kind of the existing issues in the music industry and then kind of get to how Audius solves some of these.

I think there’s some history that’s helpful to kind of understand so a lot of the way the music industry operates today you know where it’s a $42 billion a year industry, about 12% of that money makes it to artists. The other 88% of money changing hands here of that 42 billion is captured by various middlemen, intermediaries, institutional players etc which, you know, those institutional players deserve to earn something of course right? But I think we can all probably agree that it’s a bit of an unfair balance there right.

But the reason this came to be is that in historically this breakdown actually made sense and the reason for that was there was a finite amount of distribution available for music to be heard by a mass audience in a world where you had physical records and discovery of music was happening via radio rather than via other means like social media and all these other things that we have. There’s a finite amount of radio time right in a given geo and there was a finite amount of retail shelf space to host records it actually meant in a given year you can maybe have a few hundred records make it to like a national scaled release in the US let alone a worldwide release would be an even smaller number.

So in a world where there was this very small number of breakout opportunities, you know, kind of a centralized control of those opportunities for things to be discovered. It made sense right that there was a lot of capital expense and risk required to, you don’t know right think, if you’re a music label you don’t know if an album is going to do well before you spin up a factory, produce the records, put them on trucks send them out to retail space and then sell it and then pay a bunch of money on the marketing side to get it heard on radio and elsewhere so it made sense right? It made sense why the balance of power was in this way but what digital distribution ended up doing here was reducing the marginal cost of reproducing music to zero. There was no truck that has to drive the record, there’s no factory producing records. Copying bits is effectively free right? That’s number one and then number two it made the amount of distribution available infinite. There was not a fixed amount of music that had the opportunity to be heard by the world and in that world, a world of abundance, and free reproduction the economics of this should have shifted but they haven’t and there are a lot of reasons why they haven’t but it really just comes down to this structural inefficiency and how the market is organized today and an entrenched kind of set of incumbents there that that don’t, obviously, don’t want to give up the position that they have right and I think that kind of gets set, you know why Audius starts to solve these at the core. Audius is a music discovery service and a community that’s fully decentralized. There’s a network of node operators, artists and fans that together actually cooperatively run this commons of distribution for the benefit of the folks using it and the reason why it’s fully decentralized is that this is kind of the ultimate endgame of that as an artist if you can distribute directly to fans, engage directly with them, get the data back from their engagement, everything else the economics of engaging with them become a lot more favorable.

There’s no one controlling that access right in in the way that it is today so as an example like on Spotify or Apple Music or Amazon Music, like most of the big digital distributors that exist today, an end user can’t upload to them. If you made a track on your computer and you wanted to distribute with them you actually have to go through a distributor which is a different third party who then places the content there. When your content generates revenue it flows back through the distributor and potentially other intermediaries depending on how you’ve set things up and then ultimately you get paid and everyone takes cuts and fees along the way in that value chain. So long story short direct engagement is really what we see the key unlock of Audius being, to help artists take control back of their distribution stack and ultimately to make more money in the process.

BH) Sounds really interesting. I suppose you mentioned that you know what differentiates you from other conventional streaming platforms like Spotify is that they have a very rigid gatekeeping process and even though they are enabling the distribution of digital music the balance of power doesn’t really change because it just shifted from the producers and everything to Spotify. Is that pretty much what you said? 

RR) I think that’s right. The one thing I would add there with respect to the differences, I think, it’s about the artist and fans at a level of scale, having a relationship with one another. I think the result of this network of intermediaries, be it Spotify or these distributors or their kind of other various folks in that interaction, is that there are many layers between the artist and the fan and as a result of that, artists are not getting any of the data on what those fans do, not having any ability to reach them, and not having any agency with that audience,  they’re beholden to these intermediaries to be able to access them I think those are, and what you mentioned, you summarized it very nicely there.

BH) Great. I like this concept because what you really mentioned is essentially getting access to your fans which for the longest time it’s been abstracted away through all the intermediaries which is pretty cool and I’ve never really thought about it but it makes complete sense. So as you mentioned before Audius is kind of like, it’s a blockchain itself so you have your own nodes and everything and with nodes and everything you have your own token which in this case is Audio. What is the role of the Audio token and how do you keep the economics and the economy sustainable?

Role of the Audio Token

RR) The token serves three functions within the ecosystem. It secures the network so as you mentioned node operators on the network are staking the token to help host content and host metadata and do these sorts of things and then if a node misbehaves, they can be penalized or slashed so that’s kind of function number one. It grants access to features is number two. As an artist you can actually hold and stake Audius tokens to get access to novel distribution mechanics and distribution features. An example of that is you have the ability to, if you I think it’s if you hold more than 10 tokens, you can unlock this NFT page on your profile so you can connect, as a creator, all of your wallets, Metamask, Phantom; Audius runs on a combination of Ethereum and Solana, so you can connect those third-party wallets and have all of your collectibles list in one unified view and then if you click through them you can get to see markets for potentially purchase think those things as users.  

So, see a future access being number two and then number three is governance so all holders of the token are stakers of the token actually, are able to vote on any and all changes to the Audius network so let’s say I wanted to change the way that trending in Audius works to try to change the ranking of tracks or change the metrics by which performance is judged to decide which tracks are trending in a given week. That would actually have to be voted on by the community to be able to make that change, so see those are the core sets of functionality. The unifying financial mechanic there is that everyone who is staking the token which you need to stake it to get any of those three functions everyone who is staking the token captures a percentage of all revenue changing hands across a network so every time a user pays an artist a tip or to consume content or what have you, 10% of that payment is actually getting kind of pooled and distributed out alongside of staking rewards being paid out to the folks staking. So that’s kind of the unifying incentive here and it’s sort of from the artist perspective there that a portion of their revenue going to support the infrastructure that kind of powers that.

BH) That’s awesome because I think you know as an artist I’ll be more than happy to support the infrastructure rather than go into a bunch of middlemen which take most of it.

RR) Capturing ninety percent of your revenue is a good bit better than capturing twelve percent so yeah.

Who’s on Audius?

BH) I’m curious what kind of artists exist or want to join the Audius community and what are your numbers like, in terms of subscribers, artists and yeah.

RR) So there are artists of all shapes and sizes on Audius. There are some household names that you all listening might know like Skrillex or Diplo or Weezer. There’s like all kinds of different folks. I would say primarily what we’ve seen is dance music or EDM as folks often call it and hip hop are like the two predominant genres on Audius.

There are a number of other genres that have been growing quickly as well so latin music or Spanish language music is probably the fastest growing right now which has been really really cool to see communities there kind of latch on. So today there are I think you know last I checked around 250,000 artists on Audius and around seven million fans listening to content every month so the network’s growing very quickly and in a really healthy place.

It’s been really cool to see a decentralized product kind of be able to reach some meaningful scale here and I think that’s what’s now making it possible for artists to start to engage on the monetization side and everything else so it’s been a fun ride.

This all has happened in a little over two years, the project was founded in early 2018 and in late 2019 the first public version of the product launched so yeah about two and a half years ago that things got going and I think this time last year there were about a million people listening to Audius every month so in the last year we’ve seen a 7x or so.

Censorship on Audius

BH) oh, I just thought of something which I’d be quite curious to learn about basically just to provide some context in Malaysia especially over the radio our media regulators basically do not allow certain words or swear words even the word beer or anything related to alcohol can be censored over the radio and you know that’s because Malaysia is a Muslim country so I’m curious about Audius. I assume you’re a decentralized platform so there’s no such thing as censure but I’m just curious what happens when you have, you know, less than acceptable content or any kind like that.

RR) Yeah, so it’s a really great question so in music what you primarily see around this is like copyright related issues so someone uploading something that they don’t actually have the rights to or the ability to, so I think that sort of behavior runs directly counter to our mission of helping artists take control back of their content and to monetize it more effectively. So the Audius network and the community around the network actually do run a kind of a scalable moderation process so there’s mechanisms available both for folks who own the rights to a given piece of content. So like, let’s say I made a song and then like you went and uploaded it without my permission it’s actually possible for me to file a report in that nature and have your track be removed from the network. Similarly, there’s actually like automated tools around this that can scan new content against known databases of content that’s owned by folks and marked as owned by a certain person so you can compare the person uploading it and say oh if this is like a verified artist of the name that you know it’s probably supposed to be there but if it’s not it’s not.

So what’s interesting though in the case of Audius like compared to a typical centralized hosting service is that the nodes on the network are actually performing this function which is which is pretty interesting. The nodes on the network also don’t want to host content that is not authorized to be there. So those have been the moderation issues that have generally popped up on Audius to date, I think we’ve been able to get good buy-in both from artists and from the existing players in the music industry that this kind of combination of tools sort of meets the expected industry best practice, but I know that was probably way more detail than you were looking for.

With respect to your question around censorship from like nation states and from other folks like that, that’s a really really fascinating question and in Audius it comes down to the nodes again. So a node operator can choose to or choose not to host a given piece of content but it is their prerogative right. So if I’m hosting your content and I decide I don’t want to for whatever reason maybe it’s because someone asked me to censor it or maybe it’s because I’m running out of storage space and I don’t want to I do have the right to offload that content but you as a user have a right to find a different node operator too so that’s kind of the way that we see, we believe moderation needs to exist in some capacity but we think the ability to moderate should not be centralized, like we, Audius, the company that made this first version of the network should not have the capability, cart blanc, decide that something shouldn’t be here but moderation does still need to exist.

There are all kinds of different morally reprehensible things that people can use user-generated content to propagate and I think there needs to be a way to counterbalance that.

I think this is a much much longer conversation to unpack but I actually think the greatest power of decentralization is not in creating systems that cannot be moderated or that are completely resistant to all forms of censorship but rather to create systems that can diffuse the responsibility around censorship across a community and give folks agency in that choice. So if I don’t want to see content that mentions beer for example, sure that’s my choice right, but me not wanting to see it doesn’t mean that you shouldn’t be able to create it and share it and I think that’s where community moderation can actually solve for my desire and your desire in that situation like I cannot see not see beer and feel happy about that but you could still create that content.

BH) It’s so interesting that you raise this issue because it kind of aligns with what’s happening in the world right now. We see Elon Musk acquiring Twitter. It’s the same set of questions right just instead of music it’s social media it’s the same thing and it’s very interesting with what you raised because I kind of agree I’m skewed towards that viewpoint as well it might be because of my legal background but frankly speaking freedom of speech also comes with freedom of not to listen and I think what you elaborate on is basically that.

RR) I couldn’t agree more. I love that summary freedom of speech also has to go hand in hand with freedom to not listen right and the whole Elon Twitter situation is quite a fascinating one right? I think no single individual or centralized party should have the ability to moderate what happens in a kind of a commons right or a community space and I think Twitter has, to some extent, become a community space, Audius, we certainly believe is a community space and it’s one that’s also owned and operated by the same community so I think that’s really the only long-term way to create incentive alignment right between these common goods and the folks who come to rely on them. This is such a fascinating set of issues to unpack.

Unique Challenges

BH) Okay, let’s change the conversation a bit so we talked about Audius and basically it’s a Web3 music streaming platform. Are there any unique challenges that you have that are unique to you and not to other companies like say Spotify or Amazon?

RR) I think the most interesting challenge I actually see it as one of our greatest strengths but in some cases it is a weakness is that as I mentioned changing Audius is a democratic process, making decisions around how things should work, what new features should be rolled out, everything else is something that the community is directly involved in and then ultimately gets to make the final decision on, so I think the benefit of it or the strength of it is that the community has a level of involvement in the decisions being made there that have generally led to better outcomes right, but the trade-off is that things move more slowly.

There are more stakeholders involved, there’s more coordination involved, there’s more overhead generally created by that compared to the centralized kind of counterparts as you mentioned they can just make decisions without consulting anyone. The trade-off there is they sometimes make bad decisions and then that alienates their users and which, don’t get me wrong, I think our network also sometimes makes bad decisions but the rate at which that happens is lower because of the way that stakeholders are involved in the process.

NFTs on Audius

BH) Okay I think while I kind of mentioned about NFT access and you know I think anyone nowadays who talk about creative content will always bring in NFTs, so does Audius have any plans or integrations with entities at all?

RR) Oh yeah, so we already do like I mentioned there’s a way so as a user of Audius you can actually connect third-party wallets to the product so there’s this Audius native wallet that everyone who has an account gets in the process of making an account but most folks hold NFTs on Metamask and their Phantom and wherever, well hopefully they’re using hardware wallets there, but anyway the interface to a product is through these browser plug-in wallets generally and you can connect those wallets to Audius, have those NFTs show up in your in your profile page so that’s the beginning there I think now that Audius has the data from a large number of people of what NFTs they hold and how that changes over time you can probably jump to some conclusions around where things are going to go, I don’t want to speak out of turn on behalf of the community but we’re very excited for what some of those logical things in the future that come of that are as an artist being able to know who holds one of your NFTs for example and be able to identify them and have the product respond differently to them in reaction to that. There’s lots of cool stuff that comes downstream of that.

So the kind of data aggregation piece was the start and it’s from there there’s certainly a lot more planned. I think it’s interesting to note though you know we see Audius long term here being a source of utility and distribution for NFTs not an originator. I think there are plenty of other folks going after that use case doing a good job of it and Audius can support all of those NFTs made by others and make them more interesting and more useful over time so that’s kind of where we believe Audius fits in here.

Future of the Music Industry

BH) We can talk about the Audius role in the music industry and I just want to know about your thoughts on the future of the music industry. Will music producers and label companies have a role to play or will they all disappear slowly?

RR) I think music producers, so it’s worth noting for context for everyone when a song is made there are many parties involved in that and it depends on who’s making the song and what their process is but let’s say for a typical pop record right there’s obviously the artist that is singing the record, there’s also so-called songwriters that actually write the song, typically separate from the artist that’s performing it, there are also music producers that actually are sitting in the engineering room and combining the vocal track with different instrument tracks with different things to make it sound great, then there’s the mastering folks that actually kind of clean up and polish it so long story short and I’m missing a lot of folks and in that too there are a lot of people involved in making a given piece of music.

I don’t see any of those folks going away anytime soon I think the creative process around music technology has enabled a smaller number of people to do more, everything from you can actually now like in an automated fashion master content. I can pay a thousand dollars for an Ableton license and sit at my house and do music production that’s at the level of what a professional audio engineer sitting in a expensive studio can do well, okay, I can’t actually do that, but there’s no difference in the tooling available to me and that professional is what I’m saying. So you don’t need, there’s no barrier to entry there right. If I had the same skills that that person did I could do the same thing with my home computer and a thousand dollars, so technology is democratizing access to the ability to produce professional music  which is great but I still don’t see, there’s actually a certain, for music, folks who are really big music fans who are listening, this will resonate with you can actually start to hear the difference between albums produced by different people.

One of the reasons Kanye West, for example, such a fascinating artist, is because he is a world-class producer and a world-class artist and the fact that he is able to do both of those things and he actually still produces music for other artists and is able to kind of bring those ideas that he gets back to his own work I think is part of what makes him so special right, so music producers I think are going to be here forever. They occupy a very special role in the ecosystem, as do songwriters and so many others. The labels I actually believe have a strong place in the future as well and I know that actually sounds contrarian to a lot of the crypto native folks listening here but the labels have actually done a really effective job of remaking their business over the time of digitization of distribution and they actually do create a really really significant amount of value for the right type of artist.

If you’re one of those top 100 or so artists and you’re selling out massive stadiums and there’s a level of scale that it’s only possible to operate at with the support of one of these major label players right it’s not possible to be able to coordinate, aggregate revenue, everything else at that level. I think what Audius is hoping to do though for what it’s worth this is to you know give a comparable level of distribution tooling to the longer tale of creators right. I think if you’re Drake or whatever right now like you’re doing fine the music industry kind of is set up to serve you really well right and I don’t know that there’s a whole lot that Audius can do for you but if you’re like say the 150th most popular artist that is the person that stands to benefit the most I think from democratized access to distribution tooling in the same way that access over the last 20 years to music creation tooling has been democratized so yeah long story short I think the labels aren’t going away but I think the pie here is going to grow because they’re going to be more of this this kind of middle class of music creators I would call them that have the ability to reach an audience and monetize them more effectively.

The Future of Audius

BH) So yeah… A great session so far, I just want to round it off with a last question. What are Audius’ plans for 2022?

RR) Ah, this is the most fun question for us at least to think about, so the big plans are around monetization so giving artists more and more effective tools to leverage the audiences they’ve built on Audius to make money. I think Audius today is an amazing place to build an audience, build a web3 native audience to understand why they’re listening to your music, how they’re finding it, how they’re reacting to it etc etc. It’s not yet a great place to make money from your music outside of kind of the token economic structures that exist so there’s this ongoing distribution of Audius tokens to folks that are that are engaging on the network, so yeah monetization is really the big upcoming work area and getting to flesh out all of the things that I kind of referenced earlier in this conversation I think that that will really mean fulfilling like the full vision that the community has for where this network’s going so there are folks in the community that are already, have built bespoke monetization tools around Audius that are monetizing effectively and the efforts of the community going forward are generally focused in this direction of building more tools to leverage the audience that’s here.

BH) Before we go, is there anything else you’d like to share about Audius, on behalf of Audius?

RR) Yeah, I would say there’s 250 000 artists here, there are seven million people listening every month you can be 250 001 or you can be seven million and one to add to that which is to say like come join, there’s a really vibrant thriving community here of just music fans and music creators hanging out and having a great time so stop by our Discord, check out the community that’s here and get involved in any and every way that you might want to.

BH) Hey I think that’s all for today. Thank you so much Reneil for coming on.

RR) Thank you for having me.

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