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MUSICOIN

A decentralized platform revolutionizing

creation, distribution and consumption of music

White Paper
Version 2.0.0
October 2017

TABLE OF CONTENTS
ABSTRACT 3

PROJECT VISION 3

MARKET 3
Streaming 4
Performance Rights 5
Synchronisation 5

THE PROBLEM 5
Centralization 6
Lack of Transparency 10
Unsustainable Business Model 10

THE SOLUTION 11
Peer-to-Peer (P2P) Decentralization 12
Pay Per Play (PPP) Smart Contract 12
Musicoin v2.0 Platform (Heal the World) 14
Universal Basic Income (UBI) Model 15

PLATFORM DESIGN 15
UBI Pool 16
Miners 17
Musicians 17
Consumers 18
Research & Development 19
Platforms & Hardware 19
Exchanges & Fiat On-ramps 20
Third-Party Partnerships 20

GUIDING PRINCIPLE: SHARISM 20


Musiconomy 21
Open Protocol 21

PROJECT RESOURCES 22

TECHNICAL SPECIFICATIONS 24
Coin Emission 24
Ice-Age 25

REFERENCES 26

ABSTRACT
Musicoin is a decentralized platform that leverages the power of blockchain
technology in empowering musicians to take full ownership of their content and
finances. Our platform is built on a transparent Peer-to-Peer network powered by
programmable smart contracts to enable fair remuneration for all musical content and
services. Our long-term vision is to develop an open ecosystem where outsideproviders
can build music related goods and services on top of the Musicoin platform.

PROJECT VISION
Our vision is to establish our brand as a global music platform that provides fair
remuneration, distribution, and exposure for independent musicians. Our approach in
product awareness is global in scope and local in execution. By 2020, we are aiming to
license more than 30 million tracks andhostatleast1millionindependentmusicianson
our platform. Since our projects inception in February 2017, we have built a music
streaming platformthathostsmorethan5,800trackscreatedbyour1,300musiciansand
serves 18,000 listeners from all over the globe. This is just the beginning as wecontinue
to iterate and build the platform in a way that is more intuitive and user-friendly to
musicians, listeners and outside providers.

MARKET
In recent years, the recording music industry has seen a considerable boom in
revenue due to rising digital sales. IFPI (International Federation of the Phonographic
Industry) reported an industry growth of 5.9% in revenue in 2016, the fastest rate of
growth since 1997[1], with a market capitalisation of $15 billion USD. The graph below
shows industry valuation beyond 2016. The music industry is projected to achieve
exponential growth and double its market capitalisation ($26 billion USD) by 2020
(Figure 1).

Figure 1. Global annual value of the recorded music industry from 2015 to 2020[2].

Moreover, revenue streams such as streaming continue to grow with a huge


upside potential, while revenue from performance rights and synchronisation remain
undervalued within the industry.

Streaming
Streaming has become the most prevalent form of music consumption in the
modern music industry, fueling growth in almost all major markets and beginning to
unlock the phenomenal potential within developing territories[1]. The year 2016 saw
streaming revenue as the top contributor to market growth with an increase of 60.4%
the largest growth in eight years (Figure 2). It now makes up 59% of the total digital
music revenues, tothetuneof$7.8billionUSD.PSAM(P.SchoenfeldAssetManagement),
one of the leading American hedge funds, project that streaming music will liftindustry
revenues by more than 80% from 2014 through 2020 and the industry can reach 15%
annual revenue growth before the end of the decade[3].

This is accompanied by a tremendous increase in consumer appetite for


independent music. From the beginning of 2015 to the end of 2016, the number ofindie
music listeners grew by 141%[4]. These numbers will continue to grow as streaming

music services and shared playlists increase in popularity[5].

Figure 2. Global market growth in music streaming from 2012 to 2016[1].

Performance Rights
The revenue generated by the use of recorded music by broadcasters and public
venues grew by 7% to $2.2 billion USD in 2016. This revenue stream accounts for 14%
of the market but remains significantly undervalued[1]. Therefore, IFPI believes that the
global performance rights market has significant growth potential[1].

Synchronisation
The revenue from the use of music in advertising, films, games and television
programmes grew by 2.8% in 2016 compared to the 7% growth in 2015. It has
maintained its 2% share of the global market[1] and is expected to grow significantly in
the future.

THE PROBLEM
The onset of the digital age in the 1980s allowed the likes of Napster to become a
disruptive force in the recording industry. Peer-to-Peer file sharing (Figure 3) allowed

people to pirate content online without legal implications. This caused a huge uproar
amongst musicians because they werenotcompensatedfortheirwork,whichultimately
forced the industry to adapt and embrace streaming technology in the early 2000s. The
reasoning behind the shift towards streaming rather than owning content, was to
facilitate a more interactive relationship between listeners and musicians, and to drive
listeners away from piracy by offering them a free and legal alternative to accessing
music.

Figure 3. Musicians are completely disregarded from a Peer-to-Peer torrent model.

However, even with an unprecedented reduction in piracy and growth of the


streaming market, the music industry is still facing the same problem. Musicians,
especially the upcoming and the lesser-known ones, derive a paltry portion of the total
revenue generated from their work because most of that revenue is consumed by
intermediaries, the same entities who claim to represent their best interests. This
problem is predominantly due to centralization, lack of transparency and an
unsustainable business model.

Centralization
Today, about 88.5% of the global music industry is largely dominated by three
multinational record labels; Universal Music Group, Sony Music Entertainment, and
Warner Music Group[6]. These record label companies (with sub-labels and publishing
companies as subsidiaries) oversee most of the music distribution. Because of such
market monopoly, they are in a position to dictate market rules that are most favorable

to them. They often enforce unfair contracts in negotiations with streaming services,
receive large advances and bargain for minimum payment and ownership positions
under non-disclosure agreements[7]. Centralization of revenue and power among music
producers and publishers has also led to egregious abuse of nascent centralized
streaming platforms. For example, recently Sony Music threatened to withdraw all its
content from Pandora, claiming that the royalty rates were too low[8].

Similarly, data management is also becoming centralized. Streaming companies


must appease to prevalent practices in the industry even ifsuchpracticesareinefficient
or outdated. In 2014, Spotify announced that they are abandoning Peer-to-Peer (P2P)
technology, which has once helped the startup reduce bandwidth costs and saved them
millions of dollars in operating expenses every year, in favor of storing its catalog in a
more traditional centralized server architecture[9].

Moreover, the current revenue share model in the streaming music industry is
unfair to all musicians and particularly detrimental to independent and aspiring
musicians. In revenue share contracts between record labels and streaming companies,
most of the revenue goes towards paying the intermediaries, and musicians are almost
always left out of these discussions. This results in a royalty distribution scheme that
heavily favors intermediaries, at the expense of the musicians, ultimately undervaluing
the musicians work and revenue. The following is a breakdown of how royalty is
typically distributed to musicians by streaming platforms like Spotify and Apple Music[10],

...its beneficial to understand how streaming royalties are generally calculated


and paid:

1. The monthly revenue of a service (Spotify, Apple Music, et al.)


is calculated.
2. Record labels have deals in place to get their royalty
percentage flat, right off the top, so they receive their share of
revenue first.
3. The Performance Rights Organizations (PRO) also have flat
percentage deals in place, and they are paid next.
4. The streaming companies also retain a percentage for
themselves, generally 1530%.
5. The streaming services often contract various back office
services, who can getapercentagetooratherthanaflatfee(at
this point youre looking at around 40% of the total revenue
remaining, before artists, songwriters, and publishers have

even been considered).


6. To establishtheperplayallocation,youthentake[remaining
revenue / total # service plays in that month].
7. Each publisher (the people who represent the compositions)
then gets a lump sum payout of [per play allocation * total #
plays publisher owns].
8. The publisher then delivers royalties to artists and
songwriters; it is incumbent on the publishertofigureouthow
to split up their lump-sum payment to individual owners, and
they also take a cut for the administration service.

Figure 4. Current legacy system pays musicians a small fraction of total revenue.

It is painfully apparent that the musicianswhocreatedthecontentgetspaidafter


and less than the intermediaries who did not participate in the creative process(Figure
4). Here is another example of revenue share (Figure 5), according to a research paper
written by Pierre-. Lalonde from Croatian Music Institute[7],

Currently, major record labels receive up to 97% of revenues that flow to all
music rights holders, leaving just 3% to be shared among songwriters, music
publishers, and other rights holders and administrators. One reason for this is
that streaming services often only negotiate with the major record labels, which
are supposed to represent all rights holders. In some cases, record labelsarealso
shareholders in the streaming services, which clearly places their interests in
conflict with the artists, songwriters and other rights holders they claim to
represent.

Figure 5. Formula of Spotifys royalties distribution, where SMR = Spotify Monthly Revenue[11].

In addition, the royalty to an artist for each stream is dependent onthenatureof


that stream. According to Spotify, all plays on its platform are notequal.Premiumplays
have higher payout than free-tier plays[12]. This means that not only are musicians not
getting a proper cut of the revenue, their revenue stream is inconsistent as well. Most
artists on major platforms continue to earn less than half a penny per stream. On
average, they would need more than 500,000 plays to earn amonthlyminimumwageof
$1,472 USD[13]. This has led to many musicians to vent publicly against these streaming
platforms[14],

For a band of four people that makes a 15% royalty from Spotify streams, it
would take 236,549,020 streams for each person to earn a minimum wage of
$15,080 (9,435) a year. For perspective, Daft Punk's song of the summer, Get
Lucky, reached 104,760,000 Spotify streams by the end of August: the two Daft
Punkguysstandtomakesomewherearound$13,000each.Notbad,butremember
this is just one song from a lengthy recordingthattookalotoftimeandmoneyto
develop. Thatwon'tpaytheirbillsifit'stheirprincipalsourceofincome.Andwhat
happens to thebandswhodon'thavemassiveinternationalsummerhits?David
Bryne, co-founder of the band, Talking Heads.

Needless to say, the current revenue share model of incumbent streaming


platforms like Spotify and Apple music is atrociously unfair tomusicians,andespecially
puts independent and aspiring musicians at a serious disadvantage. This has led to a
growing wave of intense discontent in the artist community accompanied by public
outcryandwithdrawalofcontentfromstreamingplatformsbyprominentmusicianslike

Taylor Swift[15]andJayZ[16].Musiciansareincreasinglyseekingtocreatebetterandfairer
alternatives to centralized streaming services like Spotify[17]. And artists like Imogen
Heap, a two-timegrammywinningmusician,isadvocatingBlockchainasthesolutionfor
the woes that ails the music industry[18].

Lack of Transparency
With centralization of power in the hands of industry middlemen, the copyright
and licensing contracts for most musicians have become complex, opaque and
draconian. Artists, often with no legal background and without the means or the desire
to hire lawyers, are not in apositiontonegotiatethetermsoftheircontract.Thiscreates
a great degree of confusion, discontent and lost revenue. Although it is imminently
possible to provide clear and concise contracts that are fair and easy to understand,
industry intermediaries are reluctant to do so because the status quo benefits them
immensely.

Larry Kenswil, a former head of Universal Musics eLabs division, tells us how
insidious and prevalent this practice is[19],

Even though the role of intermediaries is prominentinthemodernmusicera,the


industry has not yet required them to provide complete, readable, standardized,
up-to-date data about music sales and licenses. This simple step, which lies in the
hands of [corporate intermediaries] and distributors, could remediate major
problems with royalties redistribution and assist artists to better understand the
industry and become vigilant about the financial reward for the exploitation of
their talents.

There is no incentive for anyone to build a system that is fully accountable. []


Major labels and publishers benefit from the currently complex and inaccurate
system, and streaming services have no incentive to invest in transparent
reporting and accounting systems, which are expensive.

Unsustainable Business Model


The streaming companies have free-streaming tiers to promote platform
adoption. Free streaming encourages growth in user-base and advertisements generate
revenue. Deezer amassed 7 million users within its first two years[20] andPandoraearns
as much as 88% ofitsrevenuefromadsalone[21].However,despitemassivegrowth,their

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business model is unsustainable. After its first year of service, Spotify doubled its loss
from $2.2millionto$4.4millionUSD[22].Pandorasawnegativeoperatingleverageduring
its first two years after a switch of service to music streaming[23]; and SoundCloud is
criticized as a company of material uncertainty because it is heavily reliant on capital
investments to operate[24].

One of the reasons behind their unsustainable business model is the rising
content acquisition costs. They are highly variable, and are mainly associated with the
type of content and licensing agreements with record labels[25]. In 2015, theamountthat
Spotify had to pay for royalties and distribution fees climbed by 85%, to about $1.8
billion USD. In other words, expenses grew more than revenues did[26]. To put this into
perspective, of every dollar that Spotify brings in the door in revenues, about 85 cents
goes right back out the door in the form of payments to the intermediaries[26].Andsince
intermediaries primarily decide the percentage of revenue share from streaming
companies, any disagreement could result in both parties being embroiled in a
protracted legal dispute[27]. In some cases, a losing lawsuit couldresultindiscriminatory
treatment of streaming companies with hikes in royalty rates, as it happened to
Pandora[28]. This pressures streaming companies to increase monetized revenue sources
to stay afloat, like paid-streaming tiers, which in turn diminishes user base. In the case
on Pandora, as studied by Music Business Research[29],

The high proportion of content acquisition costs also explains the operative loss
of $37.7 million USD in 2012, despite increasing advertising and subscription
revenues(Pandora2013:71).Infact,thecontentacquisitioncostsgrewfasterthan
the totalrevenue67.7percentcomparedto73.2percentfrom2011to2012.The
increase in costs is, thus, higher than the growth of listener hours of 72.9 percent
in the same period.

THE SOLUTION
The streaming industry is ripe for disruption by blockchain technology[30] and
Musicoin isthefirstplatforminthecryptocurrencyspacethatisunleashingthepowerof
blockchain technology tohealthewoesthatafflictsthemusicindustry.Ourprimarygoal
is to remove all middlemen and close the gap between the musician and the listener. In
the process, Musicoin will abolish the pernicious problems plaguing todays music
industry as outlined above, by decentralizing distribution and consumption of music,
making musical contracts fair and automated, and paving the way for a self-sustaining

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business model. Musicoin,byfairlyrewardingallparticipantsontheplatform,aspiresto


be the leading global ecosystem for goods and services built around music.

Peer-to-Peer (P2P) Decentralization


Third-party intermediaries foster an uneven playing field for the musicians they
work with and represent. Centralized data storage is prohibitively expensive and
vulnerable to compromise by hackers. Musicoin leverages the power of blockchain
technology to enable Peer-to-Peer (P2P) payments and data-storageinafair,transparent
and automatic fashion. Automated P2P payments enforced by smart contracts on the
Musicoin blockchain enable fair and transparent distribution of value across allparties,
from miners and project developers to musicians and listeners, without any need for
outside intermediaries.

Moreover, instead of using centralized servers, Musicoin is storing and


distributing its content through a decentralized P2P file distribution system known as
Inter-Planetary File System (IPFS). Smart contracts and content files on the blockchain
are encrypted before and decrypted after its transmission to prevent unauthorized
access and malicious activity. Metadata on our platform and user wallets can be stored
and cached indefinitely. For faster transmission and reduced content delivery costs, we
have also enabled syncing from multiple peers simultaneously.

Pay Per Play (PPP) Smart Contract


Our Pay Per Play (PPP) smart contract is thefirstofitskindinthecryptocurrency
space and is designed exclusively with the interests of musicians in mind. All musicians
on our platform retain full ownership of their content, and are rewarded fairly and
automatically through autonomous smart contracts. It brings a new level of
transparency and clarity to the music industry that is plagued by complex and obtuse
licensing contracts.

Our PPP smart contract aligns with a musiciansintuitiveexpectationofapayout,


from each single stream of their content. PPP is a smart contract on the Musicoin
blockchain that enforces and executes licensing terms to reward a certain fixedamount
of $MUSIC (native currency of the Musicoin platform) per playback.Withinseconds,the
payment goes out directly to the owner of the license for that musical work. No
intermediaries are required to facilitate payments other than the ledger oftheMusicoin

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blockchain.

Figure 6. Musicoins Pay Per Play (PPP) Model of royalties distribution.

Moreover, the PPP smart contract can be designed to execute immediate split of
revenue to several beneficiaries (Figure6).Forexample,aPPPcontractofalicensefora
four-person band can enforce a split payout of 45% to the main musician, 20% to the
songwriters and producers, 10% totheguitaristand25%tothedrummer.Theuseofthis
contract allows us to avoid unnecessary costs in content acquisition by removing all
middle-men involved and thereby distribute 100% of the earnings to the musicians.

Removal of intermediaries has allowed Musicoin to transfer most of the value


generated from music to the musicians. Below is a comparison table of per stream
payouts (in USD) among existing streaming platforms, including Musicoin (Figure 7).
Musicoin does not distinguish between signed and unsigned artists and pays its
musicians at a rate that is at least ~286% higher than its closest competitor, Spotify.

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STREAMING PLATFORM UNSIGNED ARTISTS SIGNED ARTISTS

Musicoin $0.0200 $0.0200

Apple Music $0.0064 $0.0073

Google Play Music $0.0059 $0.0068

Deezer $0.0056 $0.0064

Spotify $0.0070 $0.0044

Pandora $0.0011 $0.0013

YouTube $0.0006 $0.0007

Figure 7. Per Stream Rates from existing streaming platforms in 2017[13].

Musicoin v2.0 Platform (Heal the World)


Musicoin v1.0 (Hello) platform currently hosts thousands of artists and listeners.
Each time a listener streams a song, $MUSIC is transferred from the listeners wallet to
the artists wallet. This PPP contract in Musicoin v1.0 has helped in the tremendous
growth of the platform in a short span of eight months and in building a thriving and
passionate community of musicians and listeners.

However, as the platform continues to advance its development and forge


strategic partnerships withinthemusicindustry,thereisacorrespondingincreaseinthe
exchangepriceof$MUSICwithrespecttofiat.Atthesametime,$MUSICisexposedtothe
same market volatility forces, as all other cryptocurrencies. This has created two
problems. Firstly, if the price of $MUSIC continuetorise,usersmaybecomeunwillingto
spend it on music streaming on the platform and start hoarding it instead. Such
user-behaviorwillbedetrimentaltotheecosystem.Secondly,marketvolatilitywillresult
in inconsistent payouts to musicians.

In ordertoallowthevalueof$MUSICtogrowwiththegrowthoftheplatformand
to provide our musicians with a stableincomethatisnotinfluencedbythewhimsofthe
market, we are updating our platform with a new PPP smart contract in the second
generation oftheMusicoinplatform,Musicoinv2.0(HealtheWorld).Wewillremovethe
constraint in our original PPP smart contact of 1 $MUSIC per playback in Musicoin v1.0
andenablefractional$MUSICperplaybackinMusicoinv2.0.Thiswillenablesustainable
economic growth in the value of $MUSIC with development of the project, and at the

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same time provide a fixed but fair revenue to artists for every play.

Universal Basic Income (UBI) Model

Since the projects inception, the Musicoin development team and community
have volunteered and bootstrapped to create the thriving platform that we have today.
However, in order to continue toimprovetheplatformandhirenewtalents,adedicated
development fund is necessary. To accommodate these objectives, we are introducing a
new economic model in Musicoin v2.0, as detailed here. We believe this will ensure a
bigger penetration of the streaming market by Musicoin, generate fair and consistent
revenue for musicians, allow the growth in the market value of $MUSIC and fund a
dedicated pool for continued development of the Musicoin platform.

In Musicoin v2.0 (Heal the World), we are introducing a revolutionary new


concept in cryptocurrency, Universal Basic Income (UBI). UBI is an economicmodelto
ensure each contributor to the platform is fairly rewarded in proportion to their
contribution.

In Musicoins context, a UBI pool is createdtosecuremusiciansincomefromPPP


on the platform, at a fixed rate that is fair, uninfluenced by market forces and higher
than that of any other competing streaming platforms. This will boost the influx of
content from musicians as well as make streaming music free for listeners, thereby
ensuring deeper penetration of Musicoin into the streaming market. Unlike other
streaming platforms, usersontheMusicoinplatformwillbeabletostreamsongsforfree
and without ads. Free and unlimited music streaming without ads is the critical feature
that will distinguish Musicoin from centralized streaming platforms, allowing us to
expand radically and capture a bigger share of the streaming market.

A small portion of the UBI pool will go towards further development of the
platform, as outlined in the next section, Platform Design (F
igure 8).

PLATFORM DESIGN
Immediately after UBI implementation, $MUSIC will be used by listeners for
tipping their favorite artists on the platform. Empirical data from our blockchainshows
that revenue to musicians fromtipsisfive-foldhigherthantheirrevenuefromPPP.Free
consumption of music on the platform will encourage users to tip musicians even more
which will in-turn encourage musicians to consistently deliver qualitycontentandgrow

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its fan-base. This will create a positive feedback loop that will increase the value and
utility of $MUSIC.

In addition, we are actively building novel featuresontotheplatformthatutilises


$MUSIC,beyondPPPandtipping.Outsidedevelopers,developinghardwareandsoftware
applications on top of the Musicoin blockchain, will use $MUSIC as the currency that
powers those applications. To summarise, we arebuildingamusicalecosystempowered
by $MUSIC, the currency native to Musicoin blockchain.

Figure 8. Musicoins platform design in v2 (Heal the World).

UBI Pool
The rewards from mining, post-UBI implementation, will be split into two
fractions. Emission will stay the same at 314 coins per block every 15-30 seconds based
on miningdifficulty.Ofthose314coins,250coins(~80%)willgotominersandtherestof
64 coins (~20%) will go into a common UBI pool. Of those 64 coins in the UBI pool, 50
coins will be reserved for PPP for content streaming on the platform and the remaining
14 coins will go towards platform development (Figure 9).

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Figure 9. $MUSIC allocation pre and post-UBI implementation.

Miners
Miners have now become one of the benefactorsinthisnewecosystem,sharinga
portion of their revenue (block reward) with musicians and developers. Instead of 314
coins per block, miners will receive 250 coins per block (or ~80% of their pre-UBI
revenue) post-UBI implementation.

Musicians
Pay Per Play (PPP) income for musicians will come from the UBI pool with an
allocation of 78% of the total pool going towards compensating musicians for their
content on the Musicoin platform. PPP on the Musicoin platform after UBI
implementation will still be higher than current industry standards (Figure 7), at a peg
above 0.02 US cents per play. At the minimum peg, a musician can earn as much as
$20,000 USD from 1 million playbacks.

The chart shown below (Figure 10) will give you an idea on how our system
calculates musicians payout based on the changing market value of $MUSIC. For
example, musicians will receive 1 $MUSIC for each playback when the coins market
value is between 0 and 0.099 cents, 0.2 $MUSIC when the market value is between 0.10
cents and1.00dollar,andsoon.Thesesetrangesaresubjecttochangetoensurefairand
competitive rates within the industry.

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Figure 10. PPP smart contract under UBI.

The chart below (Figure 11) demonstrates how PPP smart contract will
automatically adjust according to change in the market value of $MUSIC.

Figure 11. PPP adjustment according to market price of $MUSIC.

Consumers
Consumers are important in driving the growth of the Musicoin ecosystem. They
buy, sell and use our currency on the platform and thereby help circulate value within

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the network. Providing more utility to $MUSIC will encourage more circulation of value
in the network.

Empirical data from our platform suggests that tipping is being actively used to
reward musicians for their content. In fact, musicians garner revenue from tipping at a
five-fold higher rate than PPP (5:1 ratio of earnings from tipping vs. streaming). So far,
more than 200,000 $MUSIC have been used for tipping on our platform. Tipping
encourages musicians to more actively engage with their fans and continue to generate
quality content. Some musicians receive as much as 1,000 MC from listeners forasingle
play.

We are also actively building and encouraging outside developers to build value
added goods and services on the Musicoin platform that will enhance consumer
experience, promote artist-fan interaction and fuel the utility of $MUSIC. This includes
but is not limited to song downloads at a higher bit-rate, remix compensation, artist
collaboration, live-show tickets, fan merchandises, licensing Musicoin catalog for public
streaming, music magazine subscriptions et cetera.

Research & Development


Every month, 4.5% of the total UBI Pool will beallocatedforfurtherdevelopment
on the Musicoin platform. These funds will help advance our platform goals, as well as
recruit and retain new additions to our team. All current team members are volunteers
and passionate developers who have been working pro-bono since the projects
inception (until UBI implementation).

Platforms & Hardware


Our Musicoin platform includes our main web-streaming platform, as well as a
user wallet and a mobile application in active development. Music player and catalogs
will be embedded on these mediums to expand user-base andpromotemusicdiscovery.
Also, our future plans in commercial product development such as enabling personal
speakers and headphones to directly stream content from our catalog, will offer ever
more ways to access ourplatform.Thericherthechoicesourconsumershave,thebetter
the exposure our musicians will get.

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Exchanges & Fiat On-ramps


Currently, cryptocurrency exchanges aretheeasiestwaytoexchangelocalfiatfor
$MUSIC, due to the scarcity of avenues to seamlessly convert fiat money into
cryptocurrencies. Going forward, we will actively seek alternative solutions that can be
integrated into the Musicoin wallet for seamless conversion between $MUSIC and fiat,
thereby drastically increasing the liquidity of $MUSIC.

Third-Party Partnerships
Copyright licenses developed by Musicoin will enable outside entities to license
ourmusiciansandtheircontentontotheirplatforms.Thesecontractswillbemuchfairer
than current industry practices and will be fully transparent to avoid confusion.
Essentially, Musicoin willactasbothastreamingserviceandaperformancerightsentity
to protect our musicians from royalty disparity and copyright infringement.

Futurepartnershipswiththird-partyorganisationswillbesponsoredbyMusicoin,
and will include local and private shows, concert-halls, music-festivals, and nightclub
performances. We will also be partnering with hardware makers to produce various
music-streaming devices like desktop speakers and headphones, as well as license our
catalogs to local coffee-shops, art museums and third-party streaming platforms.
Consumers availing these services will be required to pay in our currency, $MUSIC.

GUIDING PRINCIPLE: SHARISM


The concept of Sharism, coined by Isaac Mao, the Chief Architect of the Musicoin
blockchain, is a revolutionary philosophy that incorporates wisdom from the studies of
Epistemology and Axiology. It emphasizes the importance of sharing knowledge and
value within a community to create a positive social impact. Sharism is a
socio-psychological attitude that enables everyone within acommunitytore-orienttheir
personal values for the betterment of the community as a whole, so as to overcome the
limitations of an isolated intelligence with a highly intelligent social brain[31].

This emergent property of a highly intelligent social brain, in a sharism


community, enables it to leap-frog individual entities and non-sharing cultures through
interconnectedness of people enabling radical communication and collaboration. This

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leads to shared ownership where value is distributed throughout the network through
the contributions of everyone involved[32]. In other words, everyone is valued and is
necessary to Musicoin, the miners, the listeners, the developers, the outside providers
and of course the musicians.

The more you share, the more youreceive.Themoreyoushare,themoreyouare


shared. The more you share, the more you are. The more you share, the more
.
others receive[33]

By 2018, Musicoin will incorporate the principles of Sharism to strengthen its


existing network with a new consensus model known as Proof-of-Sharing. More
information will be available in future versions of this white paper.

Musiconomy
Musicoin ecosystem aligns with the underlying principle of Sharism. This
ecosystem, also known as Musicoin Economy or Musiconomy[*], is built as an economic
network that fosters the distribution offairvaluetodifferentparticipantsbasedontheir
contribution in the network miners for providing computational work (during
Proof-of-Work); musicians for publishing their creative work; Musicoin developers for
innovating the platform; third-party developers for increasing the value of the platform
by creating value-added goods and services, and ultimately consumers for consuming
and sharing content and services on the network.

The value of Musiconomy begins with the content-creators, the musicians. The
more the number of musicians and the moreactivelytheyreleasequalitycontentonthe
network, the more listeners will be attracted to use the platform. More consumers will
amount to more content consumption which will fuel the utility and value of $MUSIC.
This will, in-turn, encourage more activeparticipationinthenetworkbymusicians.This
positive feedback loop will continue to power the value of $MUSIC whilealsobenefiting
other participants (miners, developers, third-party services) and incentivizing their
continued participation in the network. Such a self-sustaining musical economy is
precisely the kind of ecosystem that is promoted by our guiding principle of Sharism.

Open Protocol
The Musicoin platform is a pioneer, paving the way for a paradigm shift in
musical economy and technologies thatpowercreation,distributionandconsumptionof

21

music. The Musicoin Foundation encourages and supports secondary layers of


third-party applications to be built upon the Musicoin platform.

It is an open ecosystem thatwelcomesexternalparticipationfromstart-upsinthe


music industry who are interested in building innovative technologies and services to
generate new sources of value for both musicians and listeners. For example,hardware
makers can create smart devices that can stream music from the Musicoin platform
when you are home and mine $MUSIC when you are away. Moreover, the tremendous
amount of metadata that is generated on the Musicoin blockchain will enable the
creation of artificial intelligence systems that can assist listeners with smart music
discovery based on variables like their search histories, personal mood, time of day et
cetera.

PROJECT RESOURCES
The Musicoin team is committed to execute each milestoneonitspublicroadmap
and deliver consistent and on-time results. Moving forward, we will continue to
maintain transparent communications with our community and provide them with
additional channels to get up-to-date information about the latest developments in the
project, including BitcoinTalk, GitHub and Reddit.

$MUSIC Repertoire: https://musicoin.org


BitcoinTalk: https://bitcointalk.org/index.php?topic=1776113.0
GitHub: https://github.com/musicoin
Reddit: https://www.reddit.com/r/musicoin

Moreover, therecentlyreleasedpublicroadmapexplainsourobjectivesregarding
future iterations of theMusicoinblockchain.Weaimtocontinuallymakeourblockchain
more Stable, Sustainable, Secure, and Scalable (4S). Previous version of our whitepaper
and roadmap, as well as our milestones for the next two years are provided below.

White Paper v0.9.0:


https://medium.com/@musicoin/musicoin-white-paper-free-creations-while-rewar
ding-creators-v-0-9-b14b334a8843
Q2 2017 Roadmap:
https://medium.com/@musicoin/roadmap-of-musicoin-blockchain-4a65620fefce

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TECHNICAL SPECIFICATIONS
The project was launched on the 11th of February2017whenthegenesisblockof
the Musicoin blockchain was mined[34]. The network operates under a Proof-of-Work
model using ETHash as the hashing algorithm for mining and achieving network
consensus. The Musicoin blockchain is a fork of the Ethereumblockchain,withnetwork
nodes and protocols configured as an Ethereum Virtual Machine (EVM), capable of
executing smart contracts in a Turing-complete language. In the true spirit of
decentralization and fair distribution, theprojectstartedwithoutanInitialCoinOffering
(ICO) or pre-mine or pre-allocation of funds for development.

Unlike ERC-20tokens,MusicoindoesnotfunctionwithintheEthereumecosystem.
Every feature within the Musicoin platform such as currency, nodes, wallets and the
decentralized ledger is iterated from Ethereum code-base to suit the unique
requirements of servicing the musicindustry.Thisallowsustomaintainlowtransaction
fees, remove intermediaries and act as a foundation for future layers of musical
applications to be built on top of the Musicoin platform.

On the 22nd of May 2017, Musicoin became an official member of the Enterprise
Ethereum Alliance (EEA). Musicoin developers continue to work closely with Ethereum
developers in integrating technologies that will be beneficial for the Musicoin platform
going forward. A recent example of such a collaboration is the integration of Musicoin
blockchain with Parity software (v1.8.0) tofacilitatescalingoftheMusicoinnetworkand
wallet support after the UBI implementation[35].

Coin Emission
Like Ethereum, Musicoins total coin supply is uncapped, generating 1.5 million
coins per day. The current mining block reward is 314 coins every 15-30 seconds on
average. This coin emission schemeisdesignedtofacilitateMusicoininbuildingaglobal
ecosystem that aspires to power and fairly compensate all economic activities relatedto
creation, distribution and consumption of music, via its native currency $MUSIC.

Inordertoensurewehavetheabilitytopowermusicaleconomyonaglobalscale,
it is imperative that we secure two things. Firstly, there must be a big enough pool of
$MUSIC to power global musical activity. Secondly, we must allow enough time for

24

$MUSIC to spread far and wide, so as to establish network effects and ensure equitable
penetration of $MUSIC throughout the globe. We are well onourwayinachievingthose
objectives by Q4 2018.

Ice-Age
The Ice-Age concept was introduced by the Ethereum Foundation on the 7th of
September, 2015[36]. It is a difficulty adjustment scheme where Ethereums mining
difficulty and block-reward time will switch sharplyfromasteadyconsistentincreaseto
an exponential increase.Afterthatswitch,miningwillnolongerbeprofitableforminers
and Ethereum will undergo a transition (Casper upgrade) in its consensus mechanism
from Proof-of-Work to Proof-of-Stake.

Originally, the Ice-Age was scheduled for release in Q3 2017,butduetoadelayin


Casper development, it was postponed on 21st of June, 2017 by one and a half year[37],
effectively resetting Ethereums difficulty algorithm. As a result, thedifficultybombwas
created to act as a countdown timer to the Ice-Age.

Musicoin, a fork of the Ethereum blockchain, also inherits the Ice-Age. A la


Ethereum, the onset of the Ice-Age on the Musicoin blockchain in Q4 2018 will lead to a
sharp exponential increase in mining difficulty and henceadrasticreductionintherate
of $MUSIC emission. After that, Musicoin, unlike Ethereum, will transition from
Proof-of-Work to a novel way of achieving consensus on its network, Proof-of-Sharing,
which will be outlined in the next version of our whitepaperin2018.Weconservatively
estimate that 700-800 million $MUSIC will be in circulation before Ice-Age begins.

The chart below is a visual representation of Musicoins long term inflation rate
over the course of the difficulty bomb and the onset of the Ice-Age (Figure 12).

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Figure 12. Long Term Inflation Rate for Musicoin.

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project called Musiconomi. Additionally, the Musicoin Foundation is not in direct
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