Musereum FAQ

Project

What are you guys doing?

We are developing a blockchain platform to track and transfer ownership of music, and license it for both personal and business use. This platform would serve as a core for a wider ecosystem of music industry players, united by the reduced costs and greater transparency of interactions provided by the blockchain technology.

And who are you?

We are a team of professionals who got sick of the inefficiency in the sphere that we love. We have traders, lawyers, developers and licensing professionals on board. You can read more about us at our website.

Who are the users of your platform?

We aim to create value for the industry as a whole, but at the first stage we our main users will be musicians and rights holders, who will upload their music to our system, fans and investors who will buy shares in their music, and business users who will obtain licenses from the rights holders via our marketplace.

You are launching your own blockchain - why? Are you not happy with Ethereum?

Ethereum is great, but it has limitations on the number of transactions within it. Furthermore, PoW may be considered necessary in the trustless anonymous environment of public general-purpose blockchain, but it is an overshot for our purposes - it is too slow and expensive. The most sensitive and valuable information, however, will be duplicated into the public blockchain of Ethereum Classic.

How do you plan to earn money?

Musereum itself is a not-for-profit project - it is a gift to the community and music industry. The ecosystem, however, can generate revenues. Commissions on certain transactions, paid audit of third-party smart-contracts, promotional campaigns and consulting - all of this can become an income source. But this part of the project is yet to be developed.

Do we really need a blockchain solution for this?

We do, actually. First of all, international IP rights management is very susceptible to political issues, so a system designed for this purpose needs to be truly independent - to the extent not achievable by centralized solutions. Furthermore, although such system is not thought to attract hacker attacks as much as systems oriented at anonymous markets (think SilkRoad), it needs to be tamper-proof, so that even being shut down in any jurisdiction it will keep the records to be usable in other countries.

Furthermore, utilizing Ethereum-based blockchain allows for third-party developer teams to build and integrate solutions to market riddles. Public accessible and audited smart-contracts are another rationale for adopting blockchain to solve industry problems.

What makes you better than, say, Songtradr.com or Ujo Music?

To put it shortly, we start with different markets. Songtradr is limited to the centralized licensing platform, Ujo provides a streaming platform. We, on our side, offer a full scale solution for the industry as a whole. This doesn’t make us better, but it makes us different - we could provide a one-stop solution for everyone involved. Songtradr, Ujo and practically any other start-up in the music industry need not to be our competitors - they can us and use our infrastructure.

How do you plan to attract industry players to your platform?

We start with offering them a better solution for their needs - a cheaper one, a faster one, a more convenient one. Some will come to us, some will shrug and move on. But once the critical mass is acquired, we become a standard alternative to the traditional methods of interacting within the industry. Another step - and we are the traditional method.

What will labels, publishers, etc. do after launching your project? Will they lost their job?

Not all of them. We understand that it is impossible to change the landscape of the industry immediately, and we welcome all of the players to join our ecosystem. We will provide labels and publishers with the convenient and scalable instrument, that will make their job easier, so that they could better adapt to the changing environment.

Who is "validators"? Why do you need them? Are they like miners?

In order to run a blockchain, you need somebody to verify your transactions. In public blockchains these are the miners - they may be anonymous, but we trust them because they have economic incentive to work with the majority. This trust, however, comes at a cost - a PoW blockchain is an expensive solution, and it may be an overshot for our purposes.

We use PoA consensus method - our transactions our verified by trusted individuals. Their economic motivation is more traditional than in the PoW, their stack is their reputation and legal responsibility. This individuals are validators.

To become a validator one must prove his good standing and legal status - that is why we require our candidates to have a license of a public notary in one of selected jurisdictions. This proves the existence and the identity of the candidate, as well as the amount of his reputational stack.

Can I trust your validators? How will validators be punished if they break rules?

You do not need to trust each validator, but you have to believe that it is unreasonable for them to sabotage the network from the economic point of view. On the individual level this is ensured by the structure of the network - if an individual validator starts tempering with the transactions, he will be excluded by the majority and will lose the income generated by the system, as well as suffer a reputational damage (information about this event will become public).

If, on the other hand, the majority would try to sabotage the network, legal mechanisms will play its role, and such validators would be liable for all the damages, including the reputational damage to the system. Being legal professionals, they have an incentive to act in bona fide.

Are users entitled to compensation if validators act opportunistically and it causes damages?

Yes, validators are liable for the damages caused by their failure to act in bona fide, and can be sued for any damages resulting from such failure.

Can I become a miner/validator?

Our blockchain is a permissioned one - we have formal requirements for a candidate who wants to join our network.

The main condition for becoming a validator is having and being able to demonstrate a valid license of a public notary in USA. In the future we plan to give this opportunity to other licensed professionals in another jurisdictions, but for now being a licensed notary public in United States is necessary.

Another condition is a basic level of understanding of what we do, as well as having a stable internet connection and modern hardware.

You can apply to become validator at http://validator.musereum.org

How do you fit into the music industry ecosystem?

Short answer - we try to become the music industry ecosystem.

Long answer - we start with creating a platform for registration, assigning and licensing IP rights in music. This may seem a pretty narrow scope, but it allows us to directly connect the opposing points of the value chain: the creator and the consumer. It does not eliminate the intermediaries by itself - most of them provide meaningful services and add some value to the chain - but it allows the most independent musicians to opt out of traditional transactional model and take care of every aspect by themselves.

We, however, expect that most creators would at some point need the help of a professional - a wisdom of the manager, a skill of the music producer, connections of the promotional agency. We will allow these professional to trade their skills in our platform - and that will in turn allow musicians to not be restrained and to get everything they need in one place and for one currency - the ETM token.

Is this project international? How can I know that my participation is not illegal?

Yes, it is international. We do not see how participation in our project can be considered illegal in any jurisdiction; if you have doubts about that, however, we strongly recommend you to contact a legal professional.

Do you have your Bounty program and/or Bug bounty? 

Yes, we have several - you can read about it at musereum.org

The Token

What types of tokens are there in your system?

There are two main types of tokens. The first one, ETM, is the basic token, used for every transaction within the network. Having ETMs is required to interact with our system - this tokens are transferred when obtain a license, purchase shares in the copyright or ask a participant for any service that is not free.

Another type is the music token. There are all sorts of music in the system - for every uploaded track a set of music tokens is generated. Each music token represent a share in the IP right to a certain track. They can be transferred among network participants and sold for ETMs. Each music token certifies the right of the holder to participate in track governance and receive a share of the royalties paid for the use of that track.

Can I exchange my ETM tokens for real money?

We plan to develop a fiat gateway to exchange ETMs to fiat money; until that is done, however, our tokens can be purchased from exchanges and, of course, from us during the public sale.

The Sale

Why are you selling your tokens now?

There several reasons for the pre-sale of access rights to our system. First of all, pre-sale gives us freedom to estimate the needs of our clients - by assessing the dynamics of sale we will better understand what features are more important and on what to focus our development. Token sale can be considered a marketing research with the economic incentive for the participants to provide the most sincere answers - they are voting with their stake.

Another rationale for this is to assess how intense is the need for our product. Due to the experimental nature of Musereum, we may not be able to provide universal and stable access for all participants of the network. Conducting a pre-sale therefore allows participants to book their place in our ecosystem by deciding when to enter - whether they want early access to outrun their competitors or they want to join us at later stages with a more stable and predictable product.

Finally, the amount of both technical and legal work required for the project is difficult to assess at this point - so the profits from selling early access will ensure that the team will focus on the product and avoid temptations of cutting corners at the costs of clients.

How many tokens do you offer during the public sale? What is the total supply?

The network will go operational with 250,000,000 ETM already generated. Of these 10,000,000 are to be distributed via private pre-sale, 100,000,000 are to be sold at the public sale, 40,000,000 are reserved for the team, advisors, bounties, etc. and another 100,000,000 are frozen until late 2019, when they will be sold at the second round of the public sale, the proceeds from which will be used for scaling the project and integrating more services into our infrastructure.

What is the token price?

During the pre-sale we will offer 50000 ETM tokens for one BTC. Token price for the public sale will be announced later.

Do you offer securities? Shouldn’t you register your token sale with monetary authorities?

No, our tokens cannot be considered a security or an investment instrument in most jurisdictions. We do not promise any returns on our tokens - they can only be used to obtain IP rights and services from our network participants.

Are there any restrictions on participating in the crowdsale?

Unfortunately, we will not be able to offer our tokens to the residents of USA and Singapore. Although our tokens can not be considered a security or a collective investment scheme, due to the legal uncertainties we don’t want to risk the future of our project by engaging in the activity that can retroactively be deemed as illegal. If you are a resident of this countries, you can still buy our tokens later through exchanges or via our fiat gateway.

When will I get my tokens?

Access to ETM tokens will become possible with the launch of the main network, estimated for early 2018. In order to ensure stability of the system, however, tokens will be distributed along the period of one year - the first to buy will be the first to gain access. One exception will be those who buy tokens for more then 3 BTC - we believe that such amounts mark responsible industry players with the need for early access.

What will happen with the unsold tokens?

All of the tokens are unsold during the public sale will be sent to the Musereum Reserve, where they will await for their chance to be put to use by either being distributed them among musicians via Soundchain DApp, paid as bounties for services provided to the platform, and used for scaling of the platform and integrating new services.

Licensing

What type of licenses can I get at your marketplace?

We start with offering several types of licenses: music can be licensed for use in video production (advertising, movies, corporate and personal videos, etc.), for collaboration and use in other production of audio files, for redistributing (streaming services and digital downloads). Creating new types of licenses, however, is not limited from the technical point, so we plan to allow our users to add their own types of licenses.

How is the price of a licensed determined?

The price of license, as well as any other parameter, is determined by token holders via voting. So every licensing deal is a transaction between the willing seller and buyer.

Are smart-licenses valid from the legal point of view?

Yes. In addition to the code there is a human-readable layer, and by making a transaction to purchase a smart-license you explicitly agree with the terms of the legal document in the human-readable layer. This transaction therefore will constitute a valid contract under laws of most jurisdictions, and since it is timestamped in the blockchain, it may be even easier to enforce than the traditional contract written on paper.

If I, for example, use the music licensed for the wedding video to make an advertisement, how would you know that I am cheating?

This is something that we explicitly prohibit you to do - if you pay a musician for one type of usage, but use their music for another purpose, you are basically pirating. It is the same as downloading the track illegally from the torrent tracker - why even bother with licensing, when you can just steal it?

Musereum does not plan to track the usage of the music licensed via its marketplace - it is down to the musician to see whether his licensees are acting in good faith or not. In order to help our musician we will, however, introduce a bounty for tracking possible infringements - so your not-so-wedding video might be found by some bored lawyer.

Crowdinvesting

How will the musicians distribute their tokens? What is an ICO for tracks?

Music tokens are distributed among the rights holders when the music is first uploaded according to the split of rights the uploader provides. If the rights holders decide that they need to additionally monetize their creations, they can sell some of their music tokens to public, therefore assigning a share of their rights to a track in exchange for ETM. New token holders would become co-owners of the track and would be able to participate in royalties distribution and governance of the track.

Do I need to pay taxes if I sell my tokens?

The answer to this question heavily depends on the jurisdiction you reside in and its legislation. Rule of thumb is, however, that if you gain something as a result of transaction, you probably would have to pay taxes from it. We strongly suggest that you consult a lawyer about whether this applies to you.

What shall I do with the music tokens? Can I trade them?

First of all, as a holder of music tokens you are a rightful co-owner of the track these tokens represent. You are entitled to a share of royalties paid for its use and may participate in determining how the track will be used by voting with your tokens. You may find it a good idea to promote the tracks you have invested in, since the more popular the track gets, the more expensive the license for it will become.

At our exchange platform you can exchange music tokens to ETM and vice versa. This is possible, however, only if there is a willing buyer for the type of tokens you are trying to sell. It is possible that certain music tokens will be listed at the external exchanges, but this is not something that we can be sure of.

Soundchain

What does Soundchain stand for?

It is a decentralized app running on top of Musereum blockchain, that provides streaming access to the music uploaded to our storage. The access is free for private users; at the same time each time the track is listened to, the dapp sends a certain amount of ETM tokens to the token holders of this track.

Thus creators are being rewarded, while consumers don’t have to pay for access to the music.

And where do you plan to get money to subsidize your artists?

Our system will constantly generate a certain amount of tokens in addition to the 250 million tokens generated initially - every year additional 25,000,000 tokens will be generated. These will be sent to the Musereum Reserve, and will be used to compensate validators, registrators and keepers for their services. Most of them, however, will be reserved for payments via Pay-per-Play model.

Why do you need Soundchain at all?

There are several ways Soundchain would benefit the Musereum ecosystem. First of all, by subsidizing artists, we will attract more creators to the platform by providing them with a viable alternative to the existing streaming services. Furthermore, by allowing free streaming we will attract general public to the platform, and the statistics gathered this way will help rights holders to demonstrate the value of their music to the potential business users of our platform.