Can Social Tokens Pave a New Future for Music? BitClout’s Still Banking On It
“It was almost too good to be true,” says Udell, who has worked with artists like Krewella and ZHU. “All these people involved? Really? But then I read the white paper, and I was super inspired.”
That white paper described a platform resembling Twitter, where users have profiles and can post, like, comment and share content. Anyone who joins the platform gets a creator coin in their name, the value of which theoretically fluctuates depending on that person’s social standing and how many coins are in circulation. Users can then can buy and sell each other’s coins using the platform’s native cryptocurrency, BitClout. (“If Elon Musk succeeds in landing the first person on Mars, his coin price should theoretically go up” because more users would buy his coin, the document read, but “if he makes a racial slur during a press conference, his coin price should theoretically go down,” because users would likely sell his coins away.) Users also collect a self-designated percentage of each investment into their own coin which usually hovers around 10%, called the “founder’s reward,” and can tip each other’s social media posts with coins.
The idea is that creators — among them artists — get to tap into their most dedicated fans for funding, and those fans get to share in their success. Udell quickly applied the concept to the music industry, imagining if he had invested in Billie Eilish‘s coin after attending one of her earliest shows. “That is an amazing, synergistic journey to be on with your fans, because they’re incentivized in your success at a whole new level,” he says. Thanks to his active presence on BitClout, where he often coaches new users, his coin is now trading at $5,558.
But the platform was mired in controversy when it finally launched in private beta in mid-March, given that it had reserved profiles for roughly 15,000 public figures without their knowledge, including Kim Kardashian ($2,420), Donald Trump ($353), Ariana Grande ($4,288) and Elon Musk ($21,582, the highest price on the platform). There were also reserved profiles for companies, including Billboard ($371). Those people were — and still are — invited to tweet out a series of numbers to confirm their identities, at which point they could designate and claim their founder’s reward on the coins already purchased (which amounts to millions of dollars for some). BitClout also promised to take down the profile of anyone who asked, at which point investors could pull their money out. As executives convened on social audio app Clubhouse to debate the legality of the profiles — with more than one comparing it to a Black Mirror episode — the platform crashed completely on March 12, only to resurface days later and then come out of private beta on March 24.
Despite the initial chaos, the idea struck a chord with the fast-growing community of crypto enthusiasts who seek to use blockchain technology to transform the economics of music careers. It’s no mistake that BitClout launched amid the music industry’s NFT frenzy. In a rare interview, Diamondhands (whose coin currently trades at $6,898) tells Billboard that the platform was initially meant to launch four months later in July, but that when blockchain captured the zeitgeist in the spring, he decided not to wait.
“It grew out of control very quickly,” says Diamondhands, who spoke on the condition of anonymity but whose identity was verified by Billboard. “Rather than ending up with a small, crypto-oriented audience, we had a totally mainstream audience that we weren’t really prepared for.” It took three months for BitClout to list on its first cryptocurrency exchange platform, Blockchain.com, prompting many people to label it as a scam. Diamondhands estimates that around 5% of the reserved profiles have been taken down at the owner’s request. “We had a narrative that was a bit controversial,” he adds.
Diamondhands says that keeping Bitclout’s development team anonymous is meant to “inspire the community to decentralize faster,” but his identity has nonetheless been widely speculated on in other media. Several publications guess that Diamondhands is software engineer Nader Al-Naji, who raised $135 million to launch the cryptocurrency Basis in 2018, but shut down the project the same year, citing regulatory concerns.
The early buzz around BitClout has since worn off, but its dedicated community has been quietly at work, and many members speak of it with cult-like reverence. The list of artists with verified profiles now includes Diplo ($610), Benny Blanco ($835), Steve Aoki ($970), Mike Posner ($531), Avenged Sevenfold ($2,705), Austin Mahone ($580), 3LAU ($551) and Disclosure ($271), as well as executives like longtime Madonna manager Guy Oseary ($415) and Troy Carter ($83), the former Spotify executive and founder of Q&A who deemed the BitClout launch “very punk rock” in a post on the platform. BitClout has processed more than 44,000 transactions, amounting to more than $237 million, and its now-confirmed list of investors also includes Andreessen Horowitz and Reddit co-founder Alexis Ohanian.
Fluctuation isn’t unusual for new cryptocurrencies, but the value of BitClout has dropped significantly since its all-time high of $198 per coin in June, according to Coinbase, which doesn’t support BitClout but does track its value. BitClout fell to an all-time low of just $53 in August, and currently sits at $71 per coin.
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Echosmith’s official BitClout profile.
Sibling pop band Echosmith ($685) has been testing BitClout with promising results, according to the band members’ father and manager, Jeffery David ($258), founder of Cranberry Management. The band offers a virtual meet-and-greet to anyone who “tips” one of their posts with six or more “diamonds” (bundles of coins, the cost of which is ever-changing), which amounts to at least $356 at time of publication. So far, the band has done about 15. Next, David says the band is grappling with the idea of cashing out some of their creator coins to fund a record — knowing that if they do so, the value of their coin will inevitably go down.
“I’m not a million percent convinced yet, and [BitClout] has to scale way bigger than it is now,” David says. “But something about it is really sticky.”
Meanwhile, BitClout has a fervent supporter in Fort Worth, Texas, -based independent rapper Clay Perry, who calls himself the “BitClout preacher.” Perry turned to BitClout after being disillusioned by the traditional music industry system, where he struggled to earn meaningful revenue even when his “personal dreams” came true. “I’ve been onstage with T.I. in different cities, and then I’d go back to work with Sprint on Monday morning,” he says.
Perry constantly engages on the platform and even released a rap ode called “BitClout,” which has collected 88,000 Spotify streams. Those streams are probably worth around $400. But perhaps more valuable is the roughly $50,000 investment in his coin he received following the release from an account widely believed to belong to BitClout’s investors. His coin is currently worth $884 and has a total value on the platform of $56,500, helping him move out of his parents’ place into his own apartment with a built-in studio. “BitClout changed my life,” Perry says — and he even got a tattoo of the platform’s logo to prove it.
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Echosmith advertises meet-and-greets in a BitClout post.
BitClout continues to evolve, introducing an on-platform NFT marketplace in July. But the biggest change is yet to come. Diamondhands says that in the near future, he plans to shut down BitClout.com entirely and give the frontend over to the community.
Here’s how that would work: BitClout’s data and code is open-source, and BitClout encourages developers to use it to build new, third-party apps within the BitClout network. There are already more than 100 projects in the works, from BitClout Pulse (advertised as “Bloomberg for BitClout”) to Afterparty, where creators can hold exclusive events for coin holders. As soon as third-party apps get so good that BitClout starts to feel like “the Craigslist of the ecosystem,” Diamondhands says, he will shut down BitClout.com and instead focus efforts on the BitClout blockchain that powers all those apps. (The BitClout cryptocurrency will still exist, as will creator coins.) Theoretically, this will help maximize the number of BitClout transactions that are happening, and thus maximize the value of BitClout. “In a weird way, me shutting down BitClout.com is potentially the best thing for BitClout the coin,” Diamondhands says.
But while Perry describes BitClout’s impact on his life as “just like a fairy tale,” others in the crypto community see the platform’s promises as just that: Fantasy. Among BitClout’s vocal critics is Preston Byrne, a partner at the prominent cryptocurrency law firm Anderson Kill, which sent a cease-and-desist letter to BitClout in March arguing that reserved profiles infringe on the right of individuals to profit from the commercial value of their identity.
Byrne takes issue with the value of creator coins, which he says is entirely speculative: “There’s no logical connection between the value on the BitClout system and what revenues I’m actually generating,” he points out. (The values don’t seem to correlate so precisely with social standing, either: Ariana Grande’s value is nearly six times that of The Weeknd’s, for example, but it’s hard to argue that Grande is seven times the bigger star.)
As blockchain tech takes hold of the music industry, artists don’t need BitClout to launch a creator coin, either — known elsewhere as a “social token,” or a form of cryptocurrency based around a person or brand. Portugal. The Man launched a token on creator coin platform Rally, while competing platform Fyooz has added tokens for rappers like Lil Yachty and Lil Pump, allowing holders to exchange their tokens for access to private communities, exclusive content and merchandise.
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Perry’s profile on BitClout.
Byrne also argues that BitClout’s ability to remove profiles is itself a sign that it’s not a fully decentralized platform in the first place. “If you go back to the original test, a system isn’t decentralized if a regulator can get their hands on someone and turn the system off,” Byrne says. “If there’s a web server, it can be turned off.” The inevitable need for content moderation, he adds, may prevent BitClout from ever being truly decentralized. “I think it’s going to run into the same problems that every other social network would as it hits the growth stage, and you cannot moderate without centralization.”
There is also a chance that creator coins on BitClout will be designated as securities by the U.S. Securities and Exchange Commission, making them subject to the same regulatory and filing requirements as stocks and bonds. In that case, creator coins are “not really a viable long-term path for individuals to rely on for monetization,” Byrne argues.
What we’re really looking at is what crypto enthusiasts would call “decentralization theatre,” he says: “Clothing a fundamentally centralized offering in the language of decentralization to leverage people who demand decentralized services because of their dissatisfaction with gatekeepers.” And what group of people is more dissatisfied with gatekeeping than musicians?
It’s hard to predict whether BitClout can become a solution for artists’ frustrations with the traditional music industry, but it is without question a reflection of them. BitClout epitomizes today’s culture, where creators are increasingly dissatisfied with gatekeepers and middlemen, prompting companies across social media, tech and music to adopt new initiatives to appear “creator-friendly.” TikTok now has a billion-dollar “creator fund,” for example, and Facebook says it will pay creators the same amount by next year.
“There is this universe of people who are all attempting to crack that nut: How do we get a scalable system which ensures that content creators can get paid for what they produce, and can make more money?” Byrne says. “That’s the dream. I think BitClout is one iteration of what that dream represents.”
Diamondhands acknowledges that the platform isn’t perfect, but dismisses the criticism. “The upside outweighs any negative implications,” he says. And for now, the platform is paying off in a tangible way for some. Thanks to his success on BitClout, Perry says he is working on new music; launching a crypto-focused record label that will help artists on the roster do things like create BitClout profiles and sell NFTs; and even routing a nationwide tour for Nacho Average, a new media brand he co-owns with his girlfriend, Wendy Leigh, whom he met through — yes — BitClout.
“I’m putting every chip on BitClout,” Perry says. “Whatever happens, I believe in this.”
Text source: MCC.EXCHANGE
