Audius is a distributed music streaming platform. It aims to create an economically beneficial environment for artists by using blockchain. This article provides an overview of the history of the project, the technology it uses, and the platform’s own AUDIO token.
Audius is a sidechain of Ethereum
Let’s first put Audius in the right cryptocurrency subcategory. We divide cryptocurrencies into three subcategories based on their purpose and technology: currencies, platforms, and tokens.
The main use of currencies is to transfer value in a P2P manner. Bitcoin is the most well-known example in this category. Litecoin, Bitcoin Cash, and Monero are other popular currencies.
Platforms serve as operating systems for smart contracts and distributed applications (Dapps). The best-known platform is Ethereum. It has recently got strong challengers, such as Cardano, Avalanche, and Solana. You can think of platforms like iOS or Android.
Tokens are issued on platforms and do not have their own blockchain. Governance tokens can be used for project development and utility tokens are used inside the project. Uniswap (UNI) and Chainlink (LINK) are well-known tokens.
Audius doesn’t fit perfectly into any of these categories. It is practically an Ethereum sidechain using Solana (more about this in the technology section). Audius could be placed somewhere between a platform and a token.
The AUDIO token is a governance token and a utility token in the Audius ecosystem. It is built using Ethereum’s ERC-20 standard.
The history of Audius
Audius was founded by two computer scientists who graduated from Ivy League universities, Roneil Rumburg and Forrest Browning. Both had discovered cryptocurrencies as early as 2011. They had also mined Bitcoin in its early days and managed to sell their coins near the top of the 2013 bull market.
Rumburg & Browning set up investment companies and were early investors in many cryptocurrency projects. These include Lightning Labs, which develops Bitcoin’s lightning network.
Rumburg and Browning were also big fans of electronic music. Many of the artists they followed were using the SoundCloud streaming platform at the time.
When SoundCloud signed an agreement with the international record label Warner Music Group in 2014, many artists were denied by using SoundCloud due to possible copyright infringements.
In the aftermath of Ethereum’s 2017-2018 ICO boom, Rumburg and Browning saw propitious time for a distributed streaming platform. In the summer of 2018, Audius raised $ 5.5 million in funding to start its development work.
Audius was launched in September 2019. In October 2020, the AUDIO token became available for trading on the Binance cryptocurrency exchange.
Audius has been in the headlines in recent weeks regarding its TikTok partnership. TikTok is a popular mobile app for short videos, which can also include music. Musicians using Audius can make their tracks available for the content creators of TikTok.
There was also news about a 5 million dollar investment in Audius by big music industry names, such as Katy Perry and Jason Derulo.
Musicians and fans brought closer to each other?
The music industry is a business worth tens of billions of dollars. The problem is unequal revenue distribution. Only about 12 percent of the pot is given to the musicians. As a comparison, almost half of the income of the NFL and NBA leagues ends up to the players.
New music is nowadays mostly found and listened through streaming platforms like Spotify. The top-10 largest streaming platforms are used by more than 250 million monthly customers.
Even if some of the record companies have contracts with streaming services, a million listens on Spotify generates only about $7,000 for the music creators. After everyone involved in the production has taken their shares, the artist is left with only about $2,000.
There are also other problems with centralized streaming services. The compensations aren’t always transparent. The lack of copyright data can prevent artists from receiving their royalties and musicians have to often wait a considerable amount of time for their royalties.
Audius aims to solve these issues by bringing artists and fans closer to each other. With Audius’ distributed platform, artists produce their music directly to fans, and fans pay directly to the artists.
Audius is currently free for listeners. This means that the artists do not earn anything either. Audius is planning to show ads and charge a few dollars a month in the future.
The selection on the platform is quite thin. There are some well-known artists, such as Skrillex, Weezer, and Mike Shinoda, but only a small part of their songs can be found in Audius. However, the sound quality is good (320 kbps) and the user experience is visually pleasing.
The Audius protocol consists of several layers. For the end-user, the most visible parts are the Audius website and the mobile app. You can log in to these applications by using the non-custodial Hedgehog wallet.
A user can create a Hedgehog wallet during the Audius login. The Hedgehog wallet seed phrase is sent to the user’s email, which is not the best solution from a security point of view. Audius does not recommend Hedgehog for transferring large amounts of money.
Since Hedgehog is integrated directly with Audius, it does not ask for confirmation of transactions like MetaMask does.
The structure of the Audius protocol consists of content nodes and discovery nodes. AUDIO token holders can stake their tokens by creating either a content node or a discovery node. In this sense, the structure reminds of Theta Network, in which video content is streamed by using the bandwidth of token stakers.
AUDIO tokens function in the Audius protocol as collateral. They make sure the nodes operate according to the protocol rules. If a node fails to comply, it can lose AUDIO tokens. However, in the Audius protocol, this is done through governance voting instead of blockchain code.
The minimum number of AUDIO tokens for staking is 20,000 (approximately $ 50,000 at the beginning of October 2021). This means staking is not available for small investors. However, AUDIO tokens can be also delegated via the Audius Protocol Dashboard using MetaMask Wallet.
The minimum number of tokens for delegation is just 100. The staking node then charges a fee from each delegator.
Nodes earn about 7-10% APY. In reality, the yield is about 20% since the staking nodes also receive the annual AUDIO token inflation (new tokens issued). This will change over time, though. The Audius whitepaper mentions that the annual inflation will go to the most active users in the future.
An artist uploading music to Audius does not have to run a node or stake tokens. Artists don’t have to understand much about the technical implementation of Audius.
Audius uses AudSP technology for downloading music. It is a customized version of the InterPlanetary File System (IPFS).
When an artist uploads a song to Audius, it is uploaded to a content node. The data is then transcoded and a reference is created so that it can be recognized by other content nodes. Information about a new song is stored on the blockchain and its metadata is added to the artist profile. Eventually, discovery nodes will index the transaction and the artist is informed of a successful addition.
The architecture of Audius nodes is somewhat similar to Polygon. Just like Polygon, Audius is also a side chain of Ethereum, improving the platform’s speed and scalability while maintaining a connection to Ethereum.
Polygon nodes send regular snapshots of the plasma chain to the Ethereum blockchain. This makes sure that the Polygon blockchain could always be restored in case of a shutdown. Audius nodes send similar snapshots to Ethereum, particularly about AudSP, so that artists can recover their content in case of a shutdown.
Audius will replace its own licensed and permissioned blockchain with Solana’s blockchain. Audius can be considered to be an Ethereum sidechain using Solana’s platform in the future.
The AUDIO token
The AUDIO token is an Ethereum token based on the ERC-20 standard. The token is used for staking, governance, and receiving various benefits in the Audius protocol.
AUDIO was made available for trading in October 2020. The starting price was $0.18 and it peaked at about $4 during the spring 2021 altcoin mania. The price fell quickly to around $0.60 during the summer of 2021.
Now there are some positive signs again thanks to the TikTok partnership.
📢 Announcing the Audius TikTok integration! 📢
You can now share your tracks directly from Audius to TikTok!
Follow and tag us in your videos using an Audius track for a chance to win 50 $AUDIO.
— Audius 🎧 $AUDIO (@AudiusProject) August 16, 2021
The maximum number of AUDIO tokens is just over a billion. About half of them are currently in circulation. What is noteworthy is that over 70% of the tokens are held by the team, advisors, and early investors like Coinbase Ventures and Binance Labs.
These tokens are subject to separately defined vesting schedules. The first of these earning opportunities occurred in April 2021. At the same time as the price of AUDIO token began to go down, which could raise doubts about the manipulation. The next token unlock will occur in October 2021.
Audius as an investment
The good thing about Audius is that the project has a working product – it is not just a whitepaper full of promises. There are also well-known musicians supporting Audius.
The music industry is large, so there is certainly potential revenue to be had. Like NFT and video game projects, a music token might also be a so-called “bear market proof” because the assumption is that the popularity of games and entertainment would not correlate directly with Bitcoin’s four-year cycles.
However, there are a lot of uncertainties hovering over Audius. What if a streaming giant like Spotify creates its own token and gets all the big names in the music industry? Competition is fierce and Spotify will certainly not give up its top spot without a battle.
A major challenge is also to attract new users from well-known platforms such as Spotify and SoundCloud.
There are also some strange things in Audius operations. In addition to the centralized token allocation, the number of 5.5 million users reported by Audius seems exaggerated when compared to the project’s Twitter followers or mobile app downloads.
Even the number of songs on the Audius platform is only a fraction of five million. Probably the actual number of users of Audius is only in the low tens of thousands.
Just 5% of the AUDIO tokens were distributed as airdrops to active artists and users. There were only 10,000 of these airdrop receivers, although Audius claimed to have more than 700,000 users at the time.
Founder Roneil Rumburg commented in 2021 that most of the tokens reserved for airdrops were not redeemed. It was decided to transfer these tokens to the Community Treasury managed by Audius token holders. The claim sounds suspicious, as hardly any active user misses receiving altcoin airdrops, especially at the peak of the alt season!
Audius does not have an official roadmap, but the white paper mentions the use of stablecoins as micropayments for artists. However, the regulatory climate of stablecoins is still uncertain. The recent U.S. Securities and Exchange Commission (SEC) statements may cause Audius to keep quiet about stablecoins.
Even if Audius is headquartered in San Francisco, the AUDIO token is not offered by any U.S. cryptocurrency exchange.
From an investor’s point of view, Audius can be compared to Theta. The market cap of Theta is about six times higher than Audius (October 2021). This suggests there may be room for growth. Given the above uncertainties, we recommend investors being very careful with this project.
Audius price and how to buy AUDIO
Are you interested in buying AUDIO? The AUDIO token can be easily bought from Binance. The biggest volume in Binance can be found for an AUDIO/USDT pair.