Tough love

Back in 2014 Ariana Grande and The Weeknd (who was an unknown artist at that time) collaborated on a hit: Love me Harder. Later, one of the master minds behind the track launch admitted that the collaboration was part of a strategy to promote The Weeknd, saying, "It's no accident that the new Ariana track features The Weeknd. That's strategic, because he's about to blow up with his own record." Then, Stephen Thomas Erlewine of AllMusic noted that Grande allowed The Weeknd to "suck up" the spotlight on the track. This episode illustrates how the music industry operates: an awful lot happens behind the scenes, without much knowledge from the fans or even the stars, and the big winners are the multiple middlemen that get a cut of the pie --usually in detriment of the creator.

Investment into music ICOs is still weak

It strikes the observer to see the relatively small investment into music ICOs to date -while big money is pouring into other sectors. But, is there a case for more resolute investment into the space?

As a creator puts it on a recent Harvard Business Review article (https://hbr.org/2017/06/blockchain-could-help-musicians-make-money-again):

As a musician, I want to encourage other artists to collaborate with my music. But recently, a visual artist had all of his Vimeo > videos taken down for using just 30 seconds of one of my songs. The label that exclusively licenses one of my songs likely had > a bot looking for copyright infringement that automatically took it down.
...
A major pain point for creatives in the music industry — such as songwriters, producers and musicians — is that they are the > first to put in any of the work, and the last to ever see any profit.

The Digital music Value chain

This awesome chart from (https://clubgenesysiima.wordpress.com/) illustrates how things work

Now it is clear where value is eated up in the supply chain: Digital Asset Management and Network Delivery. And those are, my friends, two of the things that blockchains can do best.

Revenues forecast explosive growth

There are unstoppable value drivers raising from "mega trends".

American Hedge Fund, P. Schoenfeld Asset Management (PSAM), which owns slightly less than 1% of Vivendi, has presented its rationale for Universal ‘going independent’ to fellow investors:

“We expect the music industry can reach 15% annual revenue growth before the end of the decade,”

...basing its assumptions on the growth of LTE 4G smartphones and new services from the likes of Apple and Google/YouTube.

The graph tells it all --there is serious money to be made, there is future (growing) demand.

Digital rights value growth is stuck

But the opportunity lies in unlocking value: there is a tangible need in digital rights

Value signals

• Now, how to find out if there's real value for any startup looking to raise funds via Initial Coin Offering?
  • Just look at a blockchain company in this vertical that has successfully raised capital via traditional means (e.g VC).
  • Such a company is Revelator (www.revelator.com). Revelator is a saas analytics platform and rights management system -in their own words "the operating system for IP Rights".

What's the investment activity?

• What's public: 4 founding rounds for $4,450,000 in total, with the first in 2015-01-31 and the last in 2016-08-29

• What's not public: There was a peak of investor activity on April 13 2016, from Israel.

Are they hiring?

• By doing signal collection at Revelator's career site we know that they are attracting talent from Israel, US, Ukraine, UK.

How the expenditures looks like?

• We looked at activity in the staging server of their digital agency provider www.koalition.com from December 2016 to March 2017.
  • This is not a cheap service: Koalition does work for top fashion and lifestyle brands such as Hermes and Adidas -so Revelator probably tries look cool to its creative audience.
  • They were testing the new Revelator website, accessing the test version mainly from Israel, Denmark and the US.
  • The resources that they were using the most were the Revelator App, the Developer portal, the Help section of the website, the Slack channel, and the Press section of the website (in that order), TeamTailor for hiring.
• It is likely that they will be using services/resources from http://musically.com/, a market intelligence consultancy for the music industry
• Besides this, in what else are they spending?
  • It looks like a very standard toolbox for a startup: they use Salesforce as CRM, Aha as organisation/roadmaping tool, box for file sharing, DaPulse as project management tool, Status Page as uptime monitoring tool...

But, is there actual demand?

• Here's the signal of actual visitors' page views to the site, the shape is not uncommon for venture funded startups

  • As you may be imagining the September peak was due to their last funding round
    

• They rarely got more than 1000 pages views a day,

  • But that should not be alarming, they are not a consumer product, but a B2B service
    

Are they the only game in town?

• Developers working on blockchain copyright tech have been following closely Vietnamese company www.copyrobo.com

  • They have also been looking at a new file format DOTBC http://dotblockchainmusic.com/

  • By the way, Revelator's own developers were quite busy until March 2016 (probably while they were developing the core product)...since then the company probably has been more focused on ramping up marketing

Encore

So folks, if you were looking for opportunities for value, music ICOs might be a place to check out. If you are interested on more analysis of coming ICOs just TIP (future post) or DM (private requests). Everyone will be happy if everyone profits!