Thursday, May 11, 2017

Bittunes is the Future for Creators

By Jon Matonis
Medium
Thursday, May 11, 2017

https://medium.com/@jonmatonis/bittunes-is-the-future-for-creators-1b210241aadc







We now have Blockchain concepts surfacing for almost everything so of course music was always going to be an attractive and obvious area to target. There are many players in this space now and it has become very fashionable.

But there is one Company who’s founder has been actively exploring what the future of music might look like for over 10 years, and since 2006 that vision always hinged on the need for a global digital currency to underpin a new model for music distribution. This vision was first articulated several years before Bitcoin was invented. I’m talking about Simon Edhouse the Managing Director of Bittunes.

Unlike most other startups in this field, Bittunes is not basing their business case solely on a technology like Blockchain, or by creating a new alt-coin or token, (to their credit they rejected lucrative offers to do so). Strategies like that are easy to duplicate so tend to occur in clusters, as can easily be seen by the plethora of ICO’s and Blockchain focussed startups around.

What separates Bittunes from other startups that utilise blockchains in some way, and why they are particularly interesting to me as an economist, is that their core vision is based on a simple yet quite audacious economic model, and the more I look at that model, the more it makes sense.

The Bittunes model expressly tries to do one thing. It attempts to define the simplest mechanism for music to be traded as directly as possible between Artist and fan, while at the same time re-configuring the reward structures that have been the basis of the music industry for over a hundred years.

Startups come and go, but good economic models tend to transcend changing fashions.

Historically it has been the providers of physical and then digital music recordings that have made money in the music business, and as a rule these have been the intermediaries in music’s supply chain, Record Labels, Rights organisations, Apple etc. It has never been the receivers of music that made money. That just wouldn’t make sense, would it? Read on..

In music’s value chain there have always been ‘rent seekers’, manoeuvring to increase their share of the pie. Occasionally, disintermediation occurs as layers are removed, creating new value, but more often than not other layers are inserted as new entrants nudge their way in with new services.

The accepted view is that these entrants provide new value so of course become part of the music industry ecosystem. However, there are now so many heads in the trough, and the largest have been around for so long that, collectively, their right to harvest more than 75% of music’s overall pie has remained largely unchallenged.

The big names in music, Justin Bieber, Rihanna, One Direction etc reap the lion’s share of what remains, and the massive long tail of aspiring Artists are left with the crumbs. Non main-stream artists do it for love, not money, and music’s consumers devour heavily subsidised (free, ad supported) streaming playlists thereby maintaining this status quo.

Artists produce, consumers consume, corporations get rich

So, how can this cycle be broken, without business processes to drive any commercial activity? So that consumers get much more variety and a multitude of currently invisible artists get a more equitable deal.

The power and appropriateness of the Bittunes model to help solve music’s entrenched problems, is that firstly, it correctly identifies which party can provide sufficient value to Artists to turn this inequitable system on it’s head, and then, secondly, it meticulously deals with the contingencies related to delivering that value via it’s business logic.

That party in music’s value chain is of course the music fans themselves, because music fans are not only the purchasers of music, (be it by subscription to a streaming music service or downloads), they are also the highly interconnected network that Artists need. They hold the keys to some of the most valued processes on the internet, and drive the value of companies like Google, Facebook etc, and in the Bittunes model, they are the new recipients in, plausibly, music’s final disintermediation.

The novel aspect of the Bittunes model is that they have worked out a sensible way to allow fans to earn money in partnership with the artists they follow. Further, the process has been designed to distribute revenue with as little cognitive cost for users as possible. In other words, it’s not just the economic model that is simple and neat, the logic around it has been carefully designed with a view to making it nearly friction-less for all parties.

The crux of the model is based on revenue sharing with meaningful clusters of users. To explain exactly how that ‘meaningfulness’ is defined, and how selection is determined, would be to give away too much, but let’s just say there is an abundance of options available to both supply and demand to self sort into appropriate groups, to generate remarkable value to both.

Why was this inventive step not already completely obvious to all of us?

To explain that, might require a bit of historic analysis. There is a pervasive narrative with regard to music that is continually reinforced in the media that the only music worth mentioning is that which is owned and controlled by the music industry. For example:
“Today, three major Record labels own well over half of the Western World’s Music” ~ The Economist [1]
It’s not hard to see how this situation has developed. The Recording Industry as we know it grew out of the combination of sheet music publishing of the music played at live music events, followed by the technological breakthroughs of the 1880’s and 90’s that produced actual recording devices, (cylinders of tin, wax, celluloid leading to the12 inch record in 1903 [2]). Gradually big business saw the opportunity for large profits by the mass production of vinyl records, and the rest as they say is history.

So, throughout most of the late 20th Century, were it not for this industry, popular music simply could not be easily heard or obtained. So in a very real sense we have all perhaps been conditioned to see the music industry and the music we listen to as inseparable, but does this still even make sense?

It should come as no surprise that with the advent of the Web and internet, that some profound macro changes have been occurring that have direct relevance to the empowerment of ordinary people in this new global marketplace.

A better understanding of the rights of the ‘Primary Publisher’ and how Bittunes also sidesteps the copyright industry

One of the tenets of the Bittunes team’s philosophy as they have endeavoured to explain this model has been to stress the significance of the role of the Artist as ‘Primary Publisher’. In the context of how Bittunes operates, this alone has very significant implications for the size of the total addressable market for the company’s services.

Legally, when an Artist writes a song, two rights are created; the right to the recording (a.k.a. the master) and the right to the underlying song itself (a.k.a. the publishing) [3]. Until an Artist signs away these rights to a Publishing House or Record Company, they are the publisher.

Music distributed by Bittunes is in fact ‘self published’ by Artists on the platform using an inherent provision within the legal deed of Creative Commons and applying that to the ‘Attribution-NonCommercial-NoDerivs CC BY-NC-ND’ License whereby any of its conditions can be waived if permission is gained from the copyright holder. In effect, this simple caveat allows this license to be used for commercial purposes.

So, what does this boil down to? It means that, whereas companies like Spotify can only operate in a strictly defined set of territories, Bittunes is free to sell music anywhere in the world, effectively opening up a global market of billions of music consumers in territories like China, India, Russia and Africa that services linked to the main stream music industry are not able to access.

It is interesting to note that Spotify’s recent purchase of Music/blockchain startup ‘mediachain,’ after a bit of analysis, seems to be less about innovation and more about the enormous difficulty Spotify has had in keeping track of the myriad complex rights agreements that apply to the music they stream. If anything it provides more evidence that a new simpler approach to music publication is overdue.

As Simon pointed out in his recent article ‘What is the ideal Music Stack?’ most music blockchain startups are focusing on integrating with the existing music industry in some way. The Bittunes thesis and strategy is a purist approach that projects a future ideal reality and sets a course toward that goal.

Needless to say, most entrepreneurs avoid challenges like this

The mission that Simon and his team have embarked on is a David and Goliath type quest, with one implied aim; to render the music industry as we know it, irrelevant. To be able to deliver on a promise like this is incredibly difficult, and requires skills, knowledge and intuition in a number of areas.

However, in this instance we have an entrepreneur who has significant domain knowledge as an award winning songwriter and film music composer himself, with a Master’s degree in science and technology commercialisation and an obsession with disruptive innovation theory. He has plenty of his own skin in the game, investing around $150k into the business, and after several years of operation Bittunes now has users in more than 90 Countries.

What chance does it have of succeeding? In its favour, the technical and market conditions have probably never been better, and certainly it is widely understood that there is a pressing need to improve the fortunes of Artists around the world.

However, as is now also widely accepted, good entrepreneurs see realities that other’s do not, and great entrepreneurs have the courage to pursue opportunities that average entrepreneurs would never contemplate. My money is on them succeeding.

Incidentally, they are raising funds at the moment at a relatively low valuation, and not as an ICO, but for real equity. A savvy hedge against the prevailing orthodoxy with regard to the future of music IMO.

Disclosure: I am on the Bittunes board of directors and a shareholder in the company.

[1] ’The music industry and the digital revolution’ https://www.youtube.com/watch?v=aqz3DaisBz8
[2] ‘A brief history of the music industry’ http://www.musicthinktank.com/mtt-open/a-brief-historyof-
the-music-industry.html
[3] ‘Licensing for Cover Songs’ https://loudr.fm/faq

Wednesday, May 3, 2017

Craig Wright's New Company is Building a Bitcoin Core Competitor

By Pete Rizzo
CoinDesk
Tuesday, May 2, 2017

http://www.coindesk.com/craig-wrights-new-company-developing-bitcoin-core-alternative/

Former Bitcoin Foundation director Jon Matonis doesn't waste any time asserting that his new employer is seeking to disrupt bitcoin's established development process.

Matonis, who joined the secretive startup nChain today, is quick to state that this is the ambition of the London and Vancouver-based operation he now claims has 60 full-time employees, including infamous developer Craig Wright.

As reported by Reuters, nChain was started by Wright, the 46-year-old computer scientist who claims to be bitcoin's pseudonymous creator Satoshi Nakamoto (though he hasn't offered much evidence). To date, nChain hasn't offered much to support its assertions that it's now the industry's best-funded startup either, hinting only that it has received more than $100m from Malta-based high-tech private equity fund SICAV plc as part of an acquisition.

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Yet, it's a different company that Matonis has in mind in conversation – San Francisco-based blockchain services firm Blockstream.

Long the subject of criticism for the significant financial support it provides to developers working on bitcoin's open-source protocol and its primary implementation Bitcoin Core, Blockstream has been villainized for that group's roadmap for scaling bitcoin, specifically its decision to prioritize innovations that don't alter a hard-coded limit on block size.

Matonis told CoinDesk:
"I immediately recognized nChain would be an effective challenger to Blockstream, which is definitely needed in the space."
In conversation, Matonis echoes a familiar refrain, that Blockstream and Bitcoin Core are too intertwined, and that Core's roadmap doesn't have broad community support.

Tuesday, May 2, 2017

Jon Matonis Joins Blockchain Pioneer nChain as Vice President of Corporate Strategy

Press Release
via PR Newswire
Tuesday, May 2, 2017

http://www.prnewswire.com/news-releases/jon-matonis-joins-blockchain-pioneer-nchain-as-vice-president-of-corporate-strategy-300449153.html

London, United Kingdom May 2, 2017 – Blockchain pioneer nChain announces the appointment of Bitcoin Foundation Executive Director Jon Matonis as its new Vice President of Corporate Strategy.  In this position, Matonis will support nChain’s business growth by developing commercial relationships, and evaluating opportunities for strategic investments and acquisitions.

Jon Matonis is widely recognised as a leading Bitcoin researcher and is a non-executive board director for several notable companies in the space. Since 2012, his technology and security writings have appeared in publications such as Forbes, CoinDesk, Bitcoin Magazine, American Banker, and PaymentsSource.

Jon is also a founding director for the Bitcoin Foundation which served as the industry’s first nonprofit trade association originally chartered to provide financial compensation for voluntary protocol code developers and to promote the vision of Bitcoin worldwide. His career has also included senior roles with Sumitomo Bank, VISA International, VeriSign, and Hushmail.

Additionally, Matonis created the first and leading general price index for Bitcoin known as the Bitcoin Price Index (BPI), hosted the largest ever Bitcoin/blockchain conference to date in Amsterdam during 2014, and enlisted seven regional chapter offices to the Bitcoin Foundation from countries such as France, Germany, and Bangladesh.

Arthur Davis, Director of nChain Holdings Limited, comments:  
“Jon was immediately attractive to nChain. During his notable career, he has consistently led the integration of financial services and cryptography. His work has included foreign currency trading for Visa International, financial platform sales for RSA’s VeriSign – securing its first $5 million in revenue – and end-to-end encrypted messaging for Hush Communications where as CEO he recruited PGP’s Phil Zimmermann as Hushmail’s Chief Cryptographer.
“Jon’s philosophy for the Bitcoin protocol and network is fully in line with nChain’s vision of on-chain scalability with decentralisation, advanced native scripting for the construction of smart contracts, and a dedicated move away from monolithic software.
“We are excited to have Jon’s deep industry experience on our team, and look forward to working with him to achieve our vision for the Bitcoin blockchain.

Bitcoin is the dominant value transfer protocol. The collective computing power directed to its network is now 3.7 exahashes-per-second and growing, making the Bitcoin blockchain best suited to directly enable and facilitate nChain’s transformative vision.

In accepting the new management team position, Matonis comments:
“The resources and funding in place at nChain provide a unique opportunity to reshape the existing landscape of Bitcoin protocol influencers. It is imperative that we move towards a status quo where the actual protocol standard is separated from its primary reference implementation, similar to the existing architecture of the Linux kernel and its low-level abstraction layer.”
 In line with this view, nChain advocates for the formation of a neutral standards organisation to coordinate and manage the Bitcoin protocol and technical standards which in the long-term will result in a more robust software design and a flourishing of compatible implementations.

Matonis adds:
“The gradual elimination of trusted third parties from our economic and legal infrastructures belies a serious and unprecedented reorganisation of many legacy social structures. The winners will be those select individuals and entities that finally liberate themselves from the current centralising, rent-seeking chokepoints.  I am excited to work with nChain to support growth of the blockchain ecosystem for everyone’s benefit.”

The quality and breadth of relationships that Matonis brings to nChain allow the company to quickly ascertain and exploit available market opportunities, and to assist its business partners to get up to speed rapidly on the design and implementation of disruptive solutions that challenge the traditional gatekeepers.

In his role with nChain, Matonis will also continue providing thought leadership on blockchain technology.  In 2011, Matonis was named Person of the Year by Digital Gold Currency Magazine and in 2015 he was appointed to the Editorial Board for cryptocurrency and blockchain technology journal Ledger. Currently, he is noted on the lists for both the Top 100 Fintech Influencers and the Top 100 Blockchain Insiders in the Crypto Sphere. For more information on Matonis, listen to his recent Virgin Podcast.

-ENDS-
NOTES TO EDITORS

CONTACT:
For media enquiries, please email media@nChain.com
or contact Infinite Global at:
Jamie Diaferia (Infinite Global, US/ASIA)
001.212.838.0220
Matthew Gilleard (Infinite Global, EMEA)
+44 (0)207 269 1430

ABOUT NCHAIN: nChain is the global leader in research and development of blockchain technologies – a distributed, decentralised ledger that chronologically records transactions in an immutable way. The nChain group of companies has grown to a team of in excess of 60 world-class scientific research, engineering and other professionals primarily based in London, United Kingdom and Vancouver, Canada.

For further reading:
"Jon Matonis Accepts Executive Position at Blockchain Firm nChain", Bitcoin.com, May 2, 2017