How This Social Media Fuelled Cryptocurrency Is Hitting All the Right Notes

Making music (and listening to it) has been a part of the social fabric since the dawn of human civilization. But how we listen to music and how that has changed over the past two decades embodies the massive technological changes that our society has undergone in the 21st century. From the days of the cool kids trotting about with their Walkmans to iTunes to streaming music via Spotify or Apple Music, you would think that music listening has reached its technical peak. Well, you could not be more wrong. Now it's music's turn to get decentralised and be on the blockchain.

Music Meets Blockchain (And Becomes a Social Media Star)

Audius ($AUDIO) is a crypto-powered music streaming platform (built on Ethereum and Solana blockchains) that is controlled and owned by token holders and these tokens are called Audio. AUDIO was listed on CoinMarketCap in October 2020 at $0.48. At the present moment, Audius is one of the first streaming platforms run on blockchain and it is not available via Apple or Spotify. Unlike Apple and Spotify's pro-rata model, Audius uses a “user-centric” model, where artists receive revenues generated by the individual users who stream their music directly. The pro-rata model of Apple and Spotify means artists get a cut of the platform’s overall monthly revenues generated from ads and subscription fees, as calculated by how many times their music was played. Critics argue that the pro-rata model prioritises bigger artists. However, the user-centric model allows artists to earn directly from people streaming their songs and the Audius's blockchain assigns unique codes to individual songs and clear records are stored each time a song is played.

On Aug 17, 2021, AUDIO literally broke new ground (or rather a support zone) when its price surged past $3 (and the market cap surged past $1 billion) on the news of Audius's partnership with video-sharing app TikTok. Under this partnership, artists on Audius will be able to make their songs available for TikTok users to include in their videos. Currently, putting independent music on TikTok requires the help of a publisher or companies like CD Baby or TuneCore that charge a fee or take a cut of revenues. So with this move, apart from promoting independent artists, middle-brokers (e.g. publishers) can be eliminated from the process of bringing music to the ordinary public. This partnership is a heady mix of a paradigm-shifting blockchain application with social media, with potential benefits for independent musicians. While I don't know much about the music industry, AUDIO's recent price spike suggests this is being seen as a positive development.

Figure 1: $AUDIO Price Movement From October 2020-August 2021 (by Coin Gecko)

So apart from its recent price surge, $AUDIO had a major price increase in April 2021 when its price crossed $4. Clearly AUDIO has been making waves even outside of its Tik Tok partnership.

Why I Think AUDIO Could Strike the Right Chord

To be honest, AUDIO's social media frenzy driven price hike does remind me of the Reddit fuelled meme stock mania. Contrary to what so many experts predicted in Jan-Feb 2021, the meme stock surges were certainly not a one-off and on Aug 20, 2021 GME closed at $159. While this price is no where near its all-time high of $483, its much higher than the 52-week low of $4.51 (don't we all wish we had latched on to $GME when it was in single digits?). So the role of social media popularity is driving price action cannot be ruled out. However, its social media driven popularity is not the only reason why AUDIO could have a strong bull run. AUDIUS surged past 5 million users in August. Under the terms of its partnership with Tik Tok, artists can will also be able to link their following on TikTok back into Audius. Given TikTok's massive user base, this could drive more users to Audius.

Finally, blockchain driven music represents a paradigm shift; a level of decentralisation and artist driven focus not provided by Apple and Spotify. Both Apple Music and Spotify are path blazers, but heavily skewed in the favour of the established artists. Audius is where the next Justin Bieber or Susan Boyle could come from as it potentially unshackles artists from established music production norms. Audius also has quite a few established artists on its roster including Skrillex, Weezer, deadmau5, Diplo and Odesza. So a heady mix of established artists and Tik Tok generated popularity for new and established artists make $AUDIO quite attractive. Of course, there is a risk that blockchain-driven music may not catch on (there are plenty of good ideas that never caught on, ask Steve jobs). However AUDIO is one of the largest decentralized consumer blockchain applications by monthly users and consumer blockchain applications are still in their infancy. too soon to write of $AUDIO. They have been around since 2018, have a good team and are attracting VC attention. Ultimately, this is the nature of crypto investments- some days you are the pigeon and some days you are the statue. But for me, any blockchain technology that could palpably change the way we interact with the external world (e.g. entertain ourselves) holds the promise of future breakthroughs (and price surges).