In today’s music industry, money speaks louder than ever. The rapid digitalization of music has led to a wide range of avenues for monetizing content. The problem however, is that the music industry was built as a centralized system for physical distribution. This was more practical in the 1970s when there was no internet and record labels were distributing actual records. This centralized system was not designed for today’s digital world and its outdated structure creates multiple inefficiencies in the music value chain.
Fortunately, we now have the technology to begin to decentralize the music industry, providing adding value to artists, consumers and other industry players. imusify is one of the pioneers of music’s decentralization movement. Other blockchain music projects also show leadership in tackling certain inefficiencies such as event booking and copyright management. However, what sets imusify apart is that it aims to serve different stakeholders and players across the entire music value chain, including crowdsourcing, collaboration, production, distribution, promotion, curation, live events and more.
While existing blockchain music projects address some current pitfalls of the music industry, imusify is designed for the future. We are building a scalable and adaptable technology framework for artists, music lovers, entrepreneurs and developers to use our platform to connect with the imusify community, create collaborative content and build new use cases.
While blockchain poses myriad opportunities to increase quality of life for virtually anyone in one way or another, operating as a decentralized organization presents inherent risk. With the birth of cryptocurrencies and exchanges, the barrier for investment decreased dramatically. The subsequent flood of currencies and initial coin offerings (ICOs) entering the market has led to several economic boom and bust episodes.
A boom and bust episode occurs when a company experiences a significant rise and fall in asset prices that do not directly relate to the firm’s value or period. With blockchain still in its infancy, very few currencies are mature enough to be traded based on their use case’s delivery of value or return of profits. Although a cryptocurrency exchange exists similarly to a stock exchange, until now cryptocurrencies have been traded solely on speculative basis, with little consideration for the actual value or potential profitability of the company.
imusify considers it a responsibility to present a cohesive document that allows us to escape the “whitepaper era” of blockchain and currency trading and into the era of real use and real value. While most whitepapers do not discuss the greater context of the blockchain economy, this analysis can be valuable to our readers by clarifying the inevitable uncertainty of an innovative venture like imusify, and by providing the necessary information for stakeholders and early adopters to make informed decisions.
Understanding Blockchain in Context
As decentralized applications (use cases that conduct services using blockchain) are beginning to pose a disruptive threat to various industries, businesses and institutions around the world are seeking to understand and invest into blockchain at a staggering
rate. In order to best understand how imusify will utilize blockchain to disrupt the music economy, it is important to first understand the evolution of blockchain technology, and the narratives that have emerged alongside it.
Blockchain was originally designed to instill a provable form of trust when conducting transactions, rendering the “trusted intermediary” unnecessary. In 2009, “blockchain” was born when Bitcoin’s genesis block was mined. This meant that the first block of the first blockchain came into existence. “Mining” refers to a process where computers collect a batch of transactions, encrypt them, and then use their computing power to confirm the group of transactions. Each group of transactions mined creates a new “block” in the blockchain. At this time, blockchain existed solely as the technology behind the Bitcoin cryptocurrency and for the next few years blockchain was onlyunderstood by a select group of early crypto enthusiasts. During this period, ideas as to how Bitcoin and other cryptocurrencies might deliver value began to emerge. People began paying for random goods and services in Bitcoin, the excitement around its potential grew, and soon the speculative value of Bitcoin began to rise. As the first blockchain startups emerged and a new network of investors was established, questions arose as to how blockchain infrastructure might play a role in updating aspects of the financial system. By late 2016, several proofs of concept had emergedand were later deemed impossible by the companies that sought to implement them. Despite the lack of success, more and more narratives and ideas emerged, and more cryptocurrencies sparked investment interest.
Today, blockchain’s network power has been a driving force in many blockchain narratives, including Bitcoin. Entrepreneurs Cameron and Tyler Winklevoss presented a popular narrative about blockchain regarding how its network power acts to coordinate beliefs behind it4. Using the analogy of the telephone, Tyler explains this particular network power. If one person in the world owns a telephone, it holds no value. If two people own telephones, a value is created as those two people can now communicate with each other. The more people that have telephones, the greater the network value of the telephones become due to the exponential growth of potential communications that can take place amongst telephone owners. Bitcoin, he explains, operates the same way as a digital currency. The more people hold it, the more value the currency has to serve as a means of exchange and a payment utility. This is an example of one of the primitive narratives that has led to speculative investments into Bitcoin, even though the areas of value chains that Bitcoin may enhance are still largely unproven.
The problem with narratives in the blockchain space is that the low barrier for creating and investing into new narratives has provided an opportunity for profiteers to take advantage of the supply of opportunistic and less experienced investors in the space. Some of these projects known as scam coin produce a narrative, often in the form of a whitepaper, about their coin’s “unique” value proposition. They then usethis narrative whitepaper to coordinate investor beliefs and raise funds through an ICO, exploiting the ill-informed investor. All they have to do is creatively link a tangible idea to the concept behind Winklevoss network narrative and people interested in that
tangible idea will buy in. The problem with scam coins is they don’t deliver any real value to users, resulting in an inevitable crash, or bust episode, once thecommunity of token holders realize their coin’s technology holds little real value.
Similarly, other blockchain startups have been seen to, either intentionally or
unintentionally, overvalue their project and promote a funding round using a similar strategy. While a startup like this may have the goal of creating a real use case, the over-fundraising that comes from their high valuation creates a lack of trust in investors that can also lead them to a similar bust episode to scam coins.
From the examples of scam coins and project overvaluation discussed above, we can see how misleading narratives can create a damaging rise and fall in a startup’s token value that does not relate to the project’s fundamental value but instead to the community’s perceived value of the project. Because token holders have the buying and selling power to both lift or sink a blockchain project, it is in any startup’s bestinterest to circulate narratives around their project that provide realistic and achievable analyses of the potential profitability of their product.
To reduce the risk of negative speculation, a startup should present an easily
understandable business model that explains which portions of a value chain are being improved or removed and how such optimizations can deliver value to participants. In order to be effective, a business plan must clearly describe how the business will make money. It also must discuss the specific components of the value chain they plan to change and the entire economic ecosystem required to deliver value to the participants and the users.
Such a business model will be presented in detail later in this paper, but we will first take a closer look at how the combination of users or individuals, narratives, and blockchain technology can co-exist to create a synergistic result.
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