Opulous built on Algorand: Bringing DeFi to the music industry

This is a guest blog written by Lee Parsons, CEO Opulous.


When I founded Ditto Music with my brother and business partner Matt, our purpose was to give artists control over their careers. 

We started off as musicians ourselves and quickly learned that you had to please a select few industry gatekeepers before you could even think about releasing material. Even if you got that far, the cost of getting signed was to surrender your recording copyrights.

It was clear to us that something had to be done to help artists take their music further on their own terms, without major label backing.

Fifteen years on and we’ve helped more than 250,000 artists get their music out to the world independently.

 Our business has expanded from distribution to providing record label, publishing and management services. Every move we’ve made has been based on our mission to help artists take control of their own music careers.

 That’s why I’m so excited about our latest product Opulous, which we’re developing with Algorand. It’s our first step into the world of DeFi.

 

 

Empowering independents

 

Opulous offers independent artists a new way to secure funding for their next project. One that lets them keep control of their copyrights.

Historically, record deals have been unfair to the point where artists give up 91% of their royalties - as well as their copyrights -  and never see any financial returns at all. This needs to change. 

Chance the Rapper, Stormzy and other hugely successful artists have used Ditto to keep control of their own copyrights and forge mainstream music careers without major label backing.

But we keep seeing independent artists run into the same problems, particularly with financing. Even successful artists with a strong track record of earnings and predictable future royalties struggle to get loans through traditional means because banks don’t recognise the value of their assets: their music.

The irony here is that music copyrights are the fastest growing asset on Wall Street. We’ve seen massive investment in this market recently, with all the major global funds taking a position. 

At the end of 2020, the Hipgnosis Song Fund - which deals exclusively in buying up music copyrights - was valued at $1.7 billion and is on course to generate over $120 million in net revenue in its current fiscal year.

 

 

How will it work?

Opulous is a decentralised peer-to-peer loan platform built on the Algorand blockchain. It will help increase artists’ access to capital without the need for traditional institutions, such as banks. It’s all about providing financial options and flexibility for artists so they can develop their careers, support each other, and remain independent.

Most musicians are saving up for equipment, touring costs and other expenses necessary to advance their careers. Many of them keep their money on the Ditto Music platform for months before withdrawing it or alternatively, they may move it into a bank where they will receive interest rates as little as 0.1%. Holding their money on Opulous will give musicians much higher interest rates.

 On top of that, musicians who are already earning a steady royalty income will be able to secure up-front loans equal to the value of revenue they generate over 12 months, with interest rates as low as 4%.

Removing the need for banks or brokers enables lenders and asset holders to deal directly with borrowers on a public blockchain. This is the very definition of decentralized finance. 

No more centralized gatekeepers, no more intermediaries “taxing” every transaction for their part in moving money or banks charging customers for leveraging their own assets. DeFi breaks this monopoly.   

 

 

Why we chose Algorand

 

We looked at various blockchains when we first started exploring how to develop Opulous. 

I’ve held the Algorand token ($ALGO) since launch and known David Garcia from Borderless Capital for several years now. It’s been inspiring to see just how committed he and his team have been to developing the Algorand ecosystem through their investments. After talking to several other potential partners, it quickly became clear that Algorand would be the natural fit. In particular, Algorand offered:


Efficiency: 

The Algorand blockchain completes all transactions in under 4.5 seconds. This means that there is no lag between a token being sent and received. And once received, the transaction is fully finalized.  While traditional finance requires intermediaries like banks and brokers to handle the details of a cash transaction, on Algorand this is completed instantly from sender to receiver.  

 

Scalability:

For a DeFi application to be truly revolutionary, the platform it is built on must be able to support its growth. There can be no decline in performance or increase in cost. The Algorand blockchain can handle 84 million transactions a day, with every single one of those transactions costing just $0.0005. This scalability will allow Opulous to grow aggressively as lenders and borrowers realise it’s game-changing potential.   

 

Security:

The Algorand blockchain is built around its permissionless Pure Proof-of-Stake protocol. This code controls how the blockchain works. It securely, transparently and anonymously creates block after block at the speed and scale described above. The Algorand PPoS protocol was invented by Dr Silvio Micali, a two time Turing Award winner for his work in cryptography. 

The protocol uses cutting edge cryptographic tools such as Zero Knowledge Proof, Player Replaceability and the Algorand VRF mechanism (variable random function) to deliver unrivalled security and protection from attack. These leading cryptographic innovations make the Algorand blockchain not only one of the fastest and most scalable blockchains in the world, they also ensures that it is one of the most secure blockchains in existence.     

 

Credibility: 

Since it’s invention by one of the world’s leading cryptographers, Algorand has attracted a team of prominent computer science, network and cryptography experts from MIT and other prestigious universities around the world. In addition to its unparalleled technical team, Algorand has also built a wider organisation led by experienced technology figures including Steve Kokinos and Sean Ford.

With a panel of leading economists and regulatory experts alongside an active foundation supporting the growth of the organisation’s wider community, Algorand has already established its reputation as a serious, long-term player in the blockchain space.      

 

Decentralising music industry funding

After losing so much power to the independent music market, major labels essentially exist as a funding vehicle. But they definitely do recognise the value of music. That’s exactly why they’re infamous for forcing artists to sign over the lion’s share of their copyrights in return for investment.

Our vision for Opulous is to give artists the means to make their next move independently, so they don’t have to resort to signing deals that are rigged in the labels’ favour.

Opulous will connect artists with investors and provide funding without the need to surrender copyrights. Artists will be able to prove their earnings with past royalty statements, using them as collateral to back the loan.

Investing in music will become open to anyone. And in turn, the platform will provide musicians with a new funding option which allows them to retain control of their music. The music industry is about to experience a decade of growth. Goldman Sachs have predicted revenues to exceed $104 billion by 2030 and it’s crucial that artists reap those rewards. But to do that, they need both funding and control over their own music. Opulous, built on Algorand, will give them just that. 

 

Plus, if they want to access high interest rates they can simply stake their royalties on the platform and earn 10-20 times more than with traditional banking. Opulous will allow anyone to invest and stake in USDT. We want to give the crypto community a 100% stable definition product backed by financial returns. 

 

Algorand deployment

 

Opulous have already begun work with Randlabs and will be releasing our MVP with a ready-to-use model in 2-3 months. We will be providing regular updates through our channels, which you can check out here:

 

Medium: https://medium.com/@opulous 

Twitter: https://twitter.com/opulousapp 

Telegram: https://t.me/Opulous