draft version 0.7.1

SINCE 2016
Thom Yorke
Artist, Radiohead
In 2007 Radiohead became the first band to release their In Rainbows album via Internet, with Pay What You Want model. The revenue from this act exceeded all expectations, however today Thom Yorke has changed opinion on the results of that experiment. In his 2013 interview for The Guardian he explains how they thought they were subverting the old corporate music industry, but instead gave rise to the new services, that used internet to comodify everything:
They have to keep commodifying things to keep the share price up, but in doing so they have made all content, including music and newspapers, worthless, in order to make their billions. And this is what we want? I still think it will be undermined in some way. It doesn't make sense to me.
Next-generation Music service provideR
Soundchain may be the game changer that you asked for, Mr. Yorke! While the Internet may not be able to replace the artifact nature of any physical media, but with the blockchain technology it can be able to add transparency to the process, and break the stranglehold of the new corporations, and bring the power back to both musicians and listeners. We are pioneering a Pay per Play model, which pays the musician in cryptocurrency, while being free to the listener!
White Paper
There is a great need to bring transparency to the music industry. Soundchain is a solution for that problem using open distributed ledger and Ethereum Classic smart contracts. Everyone is saying that the blockchain technology could be as disruptive as the Internet was back in the 90s, and we aim to redefine how the music industry functions. So we would like to invite you to take a look at our initiative, and join us!
1. Introduction

The music industry as we know it today was formed in the first half of 20th century with the advent of the music recording technology. A the time it was a very arduous and expensive process. And the product was a recorded copy of the music performance. Most of the risks at that time were carried by the record labels and publishers, so the current laws reflect that. The current system is riddled with legacy approach , and over the years has become a tangled mess, with authors and performers complaining about the "lack of transparency". The revenues streams generated by companies like Pandora, Spotify, Deezer, Apple, YouTube grow year by year up 39% in 2015 from the previous year. Those money are paid to the rights holders, but very little of the revenues made to record labels, music publishers and collection organizations aren't making it to the authors and performers bank accounts.
How does that happen? One of the main reasons is that a lot of the rightsholding organizations are appear as a "black box" to the outsiders, and without the ability to identify the contributors to the music recording and how they should get paid those royalties are kept in perpetuity. Services and PROs are also usually unable to identify the recepients for the royalty payments, so the money are placed in escrow, and eventually those money are distributed between labels and publishers based on their market share. Since the labels and publishers do not have any knowledge to find the rightful recepients for those payments they are not shared with any composers and performers.

Soundchain is an attempt to harness the blockchain technology to solve the problem of artist royalties and payments by providing transparency to the complicated chain of rights ownership and usage in the digital distribution of music, as well as offering a new model of the music creation process via the Decentralized Autonomous Labels.

2. Problem

According to the leading industry experts, the biggest problem in music industry is the issue with transparency. Due to the fact that all the data is stored using legacy systems and very inefficient processes, not only it is impossible to track who owns what, but it is also impossible to enforce. Those legacy systems aren't interconnected, and are closed for the outside viewers. It hurts not only on the financial side, but also by denying the artists feedback on how their creations perform.

Another problem is with the fact, that most of the industry is centralized in the hands of three huge "Major" music labels. While it allows them to easily hold the large market share unopposed, it also has several consequences, including the huge costs to enter the market for the new players, stiffling of innovation, and perhaps most important of all the huge operational overheads. All of that adds up to the fact, that even with the growth in streaming and electronic distribution the profits are dimnishing every year.

It is perhaps to the fact, that the major players are so big, so entrenched that they've lost the ability to change with the times. Instead of changing the underlying models, instead of reducing the overhead and increasing transparency, the funds are unexplicably squandered away cracking down on piracy and the like, increasing the overheads. The industry is so skewed, that artists receive about ten percent of the price that the listeners pay for their music, and that is in the best conditions.

There are other problematic areas, like the technological limitations of the technologies that the Internet is built on. With centralized protocols, the data transmission costs and bandwidth limitations mean that either the distribution for hi fidelity audio is very high, or it must be streamed in low audio quality, which is the current solution.

Perhaps this list could be expanded, but those are probably the most pressing issues with the industry. The need for a change is so great, that a lot of projects are springing in attempt to rethink these old obsolete schemes. We are one of them, and together we will be able to change the situation. Read on to learn how!
3. Solution

There are a lot of projects aimed at changing the situation, mostly aimed at adressing one or the few of the issues described above. One of such attempts was Global Repertoire Database (GRD), it was launched in 2011, and failed in 2014. Other projects are trying to offer their solution by attempting to leverage the distributed ledger technology ("blockchain"), to build a central, transparent rights database. Such efforts include Mycelia, Ujo, MUSE, and some others.

Our solution is to tackle all those problems, by utilizing several technologies to tackle all of the problems described in the previous section.

First of all, by utilizing the blockchain technology and smart contracts, we are able to bring transparency to the industry, by tracking the life of the music piece, starting from the first publication.

This process is facilitated by the use of Distributed Autonomous Labels, which are a number of smart contracts that automate all the functions that are expected of a label, distributor or another entity you would expect to see in the music industry, but with the overhead almost entirely reduced.

With the low operational costs, and the help of the smart contracts all of the people and organizations that participated in the creation of the music piece, would be able to set the percentages of the ownership, and thus the part of the revenue stream generated by the track. Naturally that extra money would make it into the pockets of the artists, instead of being inefficiently wasted on who knows what. And some could be even shared with the loyal fans, who help with marketing and distribution by sharing their favorite music with their friends!

The usage of peer to peer storage and delivery technologies, would allow the music in question be published and distributed in much higher quality, while keeping the costs down. They are the protocols of the future Internet, so using them today makes a lot of sense.

4. Blockchain

The team has two strategic directions in developing Soundchain. The first direction is to deploy smart-contracts into the Ethereum Classic blockchain. The second is to develop and launch a separate blockchain network, using a hybrid PoA protocol, and then, within several years, after extended testing, audit and gaining network stability, to switch to either the Proof-of-Stake protocol used by the Ethereum team, or to the Proof-of-AI protocol. The Proof-of-AI concept is yet to be announced.

5.PoA Mining switching to PoS/PoAI

Initial emission of tokens still presents an unsolved problem for Proof-of-Stake protocols.While Proof-of-Work miners only need hashing power to earn their remuneration, PoS authentication require miners to hold coins — which may not have been issued yet. This leads to most cryprocurrencies having a PoW period to create coins that would authenticate further transactions. If this period is not long enough, the platform may be suspected in being controlled by a several "whales". If it is too long, on the other hand, there is a possibility of a network being forked, because the community might be content with the status quo, and miners gain influence in the community. If anyone is to solve this problem by making the initial emission of tokens with PoS to mimic economics of PoW without the PoW itself, it may become a key concept to create pure and truly successful PoS algorithm. Instead of PoW Soundchain will initially use Proof-of-Authority protocol. 70% of the coins created will be transferred to Soundchain nonprofit trust to be redistributed among musicians, authors, labels and other copyright holders through the Proof-of-Listen protocol, patented by the Soundchain Foundation.

6. Hybrid Proof-of-Authority

Proof-of-Authority consensus engine to be used with EVM based chains. Proof-of-Authority is a replacement for Proof-of-Work, which can be used for private chain setups.It does not depend on nodes solving arbitrarily difficult mathematical problems, but instead uses a hard-configured set of "authorities" - nodes that are explicitly allowed to create new blocks and secure the blockchain. This makes it easier to maintain a private chain and keep the block issuers accountable.

An open network based on Ethereum protocol with Proof of Authority consensus by independent validators. Licensed public notaries serve as private actors on public duty to secure the network.

Is it private or public blockchain? It's hybrid! Anyone can become a member of the network by registering an account and buying coins. It's possible to use any applications developed for Ethereum. Liquidity in the form of coins is created by validators, which are independent, unaffiliated notaries with a known identity. A doubting network participant can cross-validate a notary with the help of "proof of identity" oracles or government services.

7. Token as a service

The Soundchain platform allows for lossless audio files to be uploaded to the IPFS (InterPlanetary File System). While doing so, the system emits tokens for these files (which can be considered "copyright shares"). It permits commercial licensing of these files through digital commercial licenses implemented in smart-contracts, that contain special clauses relating to possible uses of the files. Smart-contracts ensure the royalties from such commercial licences to be distributed automatically between token-holders. Thus, emitting digital assets – tokens – for music allows for the IP rights for the music to be allocated efficiently by enabling distribution of copyright shares between various persons, such as musicians, producers, record labels and publishers, etc.

Key concepts:

1.PPP (Pay Per Play)

Pay Per Play smart contract is designed to make a microtransaction every time the audio file is listened to. It activates with the initiation of Proof-of-Listen algorithm and sends the amount calculated according to the current USD exchange rates and main SOCH token price.

2.PPSP (Pay Per Share & Play)

Pay Per Share & Play smart-contract is designed to make micropayments to Reposters every time they listen to the audio file. This micropayment amounts to 5-25% of the royalties to be distributed to the copyright holders.

PPP and PPSP smart-contracts shall use the Raiden network for off-chain transactions and opening of p2p channels (state channels) to minimize transaction fees and maximize transaction speed.

State channels are an important technology that has the potential to greatly improve the scalability and privacy of many categories of blockchain applications; in conjunction with sharding and other privacy-preserving cryptographic technologies, they are an important ingredient in helping decentralized systems to achieve the properties that mainstream individual and institutional users expect and deserve.

3.Commercial smart-licenses

Commercial licenses are implemented in smart-contracts and bound to the track tokens. They determine the ways track may be used, as well as the amount of royalties, including region-specific pricing options. The term of such license is determined by its administrator. After the license is expired, it automatically requests approval of the track token holders to be renewed on the same conditions. If the majority of track token holders vote against it, the administrator issues a smart-license with parameters agreed upon by 51% of token holders. Smart licences distribute royalties between track token holders.

Smart-license has 4 layers:

  1. Legal prose

  2. Human-readable text

  3. Smart-contract code

  4. API for accessing metadata and selling through external platforms

4.Decentralised Autonomous Labels

Creation and emission of track tokens to be transferred to personal account.

5.Smart-contract for emission

A smart-contract that assembles smart-contracts and track licenses to be deployed into the blockchain. It uses file container to identify and write metadata into and

6.Proof of listen

An algorithm of listening to the track, that is generated at random based on track sales or POS deposit. It shall be 100% tamper-proof to resist bots and other types of fraud.

7.Modificator of random number generation

A special smart-contract that analyses sales data or POS deposit and lowers track generation percentage. POS deposit

8. Modificator of random number generation

A mechanism to deposit SOCH tokens to increase the Pay per Play remuneration in the range of $0.01-$2.


  • amount of desposit in USD

  • term of freeze

  • amount of Pay per Play remuneration

9. Price Oracle

A mechanism to check and sign listings to enable Pay Per Play smart-contracts payments and transactions, as well as to determine the amount of POS deposit. We perform calculations for our transactions in USD, since price volatility for SOCH tokens makes it difficult to determine a fair remuneration for copyright holders and deposit amounts. By calculating the average token price in USD, the oracle serves as a connection between smart-contracts and APIs of exchanges.

Main products:

Proof of Listen protocol and its documentation

  1. Emission Contract

  2. License Factory

  3. Random Number Generator

  4. Price Oracle

  5. Pay Per Play Contract

  6. Pay Per Play fund remuneration fork

  7. Nonprofit Soundchain Foundation

  8. Commercial licenses sales indicator

  9. Modificator of random number generation

  10. POS deposit system

  11. Token emission fee

8. Commercial Licenses

Digital licenses implemented in smart-contracts allow to define the scope and terms of use of the track for companies and persons. Authors and copyright holders can use a special constructor to specify prices, discounts for large streaming providers, area for commercial use. The platform also allows artists to collaborate and allocate joint copyright for their music.

Soundchain token is a cryptocurrency issued by the non-commercial Soundchain Foundation. 100 million tokens are created to facilitate the Soundchain economy. In the next ten year another 100% would be issued.
Soundchain token is a freely traded cryptocurrency and it is possible to easily convert it to any other cryptocurrency (BTC, ETC, etc) or fiat currency (USD, EUR, RUB, CNY) at partner cryptocurrency exchanges.
Token Usage
Main Soundchain token is used to buy commercial Smart Licenses, and periodic royalty/dividend payments, as well as token for PoS security deposits.
Due to the high volatility of the cryptocurrency exchanges, the monetary policy of the Foundation regulates the reward amounts in tokens to stay between $0.01 and $2 for each listen of the recording payable to the Musician, Reposter and Distributor accounts.
Luck Modifier
Special algorithm, which generates the percentage of track at which the musician/right holder receives the PAY PER PLAY reward for listening, and depends on the commercial license sales and PoS deposit.
Proof of Listen
Algorithm that regulates the percentage of the listening to the track by the listener, after which the musician, author or artist receives the reward from the fund. The Proof of Listen can vary between 30% and 100% and depends on the amount of tokens at the deposit account.
Proof of Stake Deposits
Proof of Stake Deposits — is a special algorithm that is instrumental to regulation of monetary policy of the Fund and allow for stability of the system and potential economic growth.
8.UI For Dapps

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