Carlos Gayotto, founder of TuneTraders, says the company prepares expansion and token of “great country artist”.

TuneTraders, a Brazilian startup that uses blockchain to change the way the music industry works, is now preparing in two strong actions. One of them is the tokenization of the co-production rights of a “great country singer”. Something similar to what he did with an unpublished song by singer Zeca Baleiro last August. The other action is a fundraising round for its next expansion phase, which the company does not open up for.

“We have a script: the first step we implemented was to encourage new works by artists. The next step is to integrate Application Programming Interfaces (APIs) from music distributors and associations. Thus, we are going to automate the receipt of royalties from artists and the payment for those who bought tokens to co-produce their work”, said Carlos Gayotto, Cacá, founder and CEO of TuneTraders to Blocknews.

One of the challenges of integration is making everyone understand the new way of financing music and distributing blockchain earnings. Today, in general, record companies raise funds to finance the artists. But, they also work a lot on their dissemination and relationship. In addition, the era of record sales gave way to the purchase of one song at a time and streaming, for example, and for artists it is also challenging to see the possibility of gain, says the manager.

Therefore, “TuneTraders wants the artist to make one song a month and by the end of the year have a 12-track disc”, says Gayotto. More viable, faster to produce and with revenue coming in over time. For this, in your model, you can count on micro-investors.

TuneTraders wants to disrupt “from the outside in”

TuneTrader also wants record companies and distributors to join the platform, which can facilitate fundraising, reduce their costs and allow them to dedicate themselves, for example, to promoting artists, something they have been doing more and more, says Gayotto.

And later, the startup even wants to be in the distribution, as the plan is to have its own music streaming. “We want to make a disruption from the inside out. It’s better than fighting with everyone. Let’s not take the label off the map, it’s a model of ‘coopetition’”.

Since it started operating in early 2020, TuneTraders has seven cases of music financed by tokens. “I was very conservative to validate the Minimum Viable Product (MVP)”, said Gayotto, who has always worked with audiovisual, including at Disney and SBT.

Of the seven artists, the projects of four of them cost R$5,000 each. For Zeca Baleiro there were 1,360 tokens at R$100 each, a total of R$136 thousand. They sold R$ 58.5 thousand. The return in royalties for those who have the token starts to become clear in 3 months, according to the CEO. “I thought the number was excellent, also because the production cost is at most R$15,000.

For the next “great country singer”, as TuneTraders describes her, without revealing her name, tokenization should be around R$ 250,000. But, the project also includes several other actions to launch the track, including prime time TV shows. According to the startup, the artist has to have “millions” of followers on Instagram.

Startup usa Hyperledger Fabric

TuneTraders released 1,360 Baleiro tokens and sold 585, which they thought was good: TunaTraders.

The startup has been using the Hyperledger Fabric blockchain from the beginning, in the prototype phase. That’s because a public technology didn’t sound good to investors. The advancement of Hyperledger, with the Cactus solution, allows integration with other blockchains and facilitates interoperability. Thus, you can mobilize wallets to use the Ethereum ERC-20 token, for example. The company token is proprietary.

Now, TuneTraders has just closed the contract from GoFabric, blockchain network orchestration platform Hyperledger from GoLedger, and also the provision of development services. “We help customers with development, but they don’t have to stay with us forever. If in the future they no longer want to stay with GoLedger, they will keep the code”, says Otávio Soares, COO of the company.

Maurício Magaldi, the startup’s blockchain mentor, says that GoFabric will make the project more robust. And that the choice for GoLedger is due to the fact that it is the main company with domain of the solution in the country.

Gayotto explains that TuneTraders, like the phonographic industry, follows the regulations of the Central Collection Office (Ecad), which charges for copyright content.

The token is also not a security, or security that gives financial gain, which would need authorization from the Brazilian Securities Commission (CVM), in the case of certain crowdfundings as well. And it’s not security because whoever buys affects earnings, since when they listen to music, it generates royalty. In security, the security holder does not have this influence.

The plan is to have its own streaming and go international

However, TuneTraders’ future plan does not only involve its own platform to play the songs. The startup also wants to go international and for that, it will need resources. It could even be through the issuance of cryptocurrency (ICO), but this will depend on demand, because the project does not need crypto to run.

Gayotto explains the idea of ​​a platform to play the songs in the following way: “For the user it is excellent to use Spotify, but for the artist who no longer sells records this situation is horrible. We want to annoy the very big players in the market and give back power to the artists.”

“My vision is that two years ago, in an auditorium with 100 people, there were an average of 500 devices connected. Very soon, this number of devices will increase exponentially, crossing data all the time. So I’m going to listen to a song and if it’s on the blockchain, I can pass the public performance to collect royalties”, says the manager.

And the company is also thinking about video media: “This has incredible potential, but first we need to validate the smaller ticket,” explains Gayotto.

TuneTraders is a member of the Open Music initiative, of the Massachusetts Institute of Technology (MIT) and of the Berklee College of Music, which studies the use of new technologies in the music production chain and has worked at the FGV Ventures and Big Bets accelerators.