Although the model of music distribution has changed significantly in the last century—from records to CDs to MP3s to streaming—the music industry’s structure has not experienced as major a shift. There are still agents, record companies, lawyers who specialize in licensing, and other players who demand a cut of the profits for every album sold. That means that the vast majority of money generated by music is funneled away from the musicians that created it. However, modern technology has the potential to allow music makers to provide their products directly to consumers.
This is the problem that Audius seeks to solve. By using a decentralized network of computer nodes and the immutable nature of blockchain for tracing and proving ownership of data, Audius fosters a marketplace where musicians and fans can interact more directly. Such a system reduces the need for intermediaries that require cuts of profits derived from music and aspires to return control of music to the people who make it.
The network includes two types of nodes—one to store data (music files) and another to index the data and make it discoverable by consumers—and its AUDIO token is used as a basis for economic incentives. This includes staking to secure and run the network, governing the protocol, and accessing certain services for creators and users.
How was Audius developed?
Audius was founded by Roneil Rumburg (who is Audius’ chief executive officer), Forrest Browning (Audius’ chief product officer), and Sri Lankan musician/entrepreneur Ranidu Lankage. Rumburg and Browning studied computer science together at Stanford before creating their blockchain music company. Lankage led Audius before leaving in 2019, subsequently moving on to other investing and tech ventures.
The original Audius whitepaper was published in 2018, and this was followed by the release of a private alpha version of the protocol in 2019 that allowed the developers to receive feedback to improve their project. A testnet was released in August 2019, which was when independent third-party node operators could first begin supporting the network. Over the following months, a full complement of features was slowly released. According to Audius, more than 500,000 monthly users were interacting with the protocol by August 2020. The next month, the Audius mainnet launched, along with the AUDIO token.
Since launch, the music on Audius has trended largely towards electronic and hip-hop/rap, and it has been able to boast over 5 million monthly users at least once in its short history. In 2022, Audius acquired the virtual concert platform SoundStage.fm.
Audius has found investment support from multiple sources including traditional venture capital firms, which began with an early $5.5 million funding round in 2018. However, notable investors have also come from the traditional music world and include Katy Perry, The Chainsmokers, Steve Aoki, and Deadmau5.
How does Audius work?
The Audius platform is designed to make music files available on a secure network and incentivize an economy to reward two parties: those who create content and those who support the network. Therefore, other than music creators and consumers, there are three vital parts to Audis’ infrastructure: computers that maintain data (content nodes), the smart contracts that make up the platform (content ledger), and computers that allow users to navigate the music collection (discovery nodes).
- Content nodes: These computers host data vital to the Audius ecosystem, including audio and image files. They operate the Audius Storage Protocol (AudSP), which manages decentralized data for Audius by interfacing with the InterPlanetary File System (IPFS). Through this system, content nodes allow artists to transparently define how fans can access encrypted content and facilitate fans’ interactions with the platform (e.g., payments).
- Content ledger: This is the collection of smart contracts that support Audius on blockchains where the platform is deployed, including Ethereum. Smart contracts define how artists control the distribution and revenue for their work, the registry and operation of nodes, and how users interact with the platform.
- Discovery nodes: All products on Audius would be useless if they were undiscoverable. These nodes are computers that index data and earn revenue (in AUDIO tokens) by tracking use of the network and allowing users to search for content.
How is the AUDIO token used?
The Audius platform token (AUDIO) has three primary uses. First, it is used to secure the network through staking. AUDIO is staked as collateral by nodes—a minimum of 200,000 AUDIO— in order to allow them to collect protocol rewards (through newly issued tokens). The more tokens a node stakes, the more likely it is to be used by fans/clients and thus be eligible to receive rewards. This system incentivizes maximal staking. Second, AUDIO can be used to take advantage of certain unique features of Audius’ platform. Finally, it is used as a tool of decentralized governance in which holding more AUDIO translates to more voting weight in the community.
Token economics and distribution
The initial rate of issuance of new AUDIO tokens (inflation) was set to 7%, but this can change throughout time. There is no maximum supply of AUDIO.
Of the 1 billion tokens released at launch, 40.6% were allocated to the founders, team, and strategic advisors. Another 36% was issued to investors in the project, 17.8% to the treasury of the Open Audio Foundation to stimulate platform growth, and 5.5% to early adopters and artists.
Conclusion
- Audius is a music hosting and streaming platform based on blockchain technology and a decentralized cohort of computers.
- There are three important components of the Audius platform: content nodes, the content ledger, and discovery nodes.
- The AUDIO token is used for staking, incentivizing use of the network, and for community governance.