A buzzy new music startup called Sound.xyz has raised a $5 million seed round, with contributions from Andreessen Horowitz (a16z), Variant Fund, Li Jin’s Atelier Ventures, a handful of crypto angels and artists like Holly Herndon, 21 Savage and DJ Drama.
Sound’s pitch has to do with helping musicians make a living via crypto – specifically, a set of non-fungible tokens (NFTs) tied to new releases.
“There’s only 7,800 artists that make over $100,000 or more per year [on Spotify],” said Sound co-founder David Greenstein, who built the company in relative secrecy over the course of the past year. “The number for $50,000 or more per year is 13,400. This is before you pay a label, before you pay any bandmates or producers.”
The idea is to target artists with low-to-mid-sized followings, who could potentially use non-fungible tokens to supplement streaming revenue.
Said Greenstein, “If we build for the artists who are making a lot of money on Spotify, it’s 7,500. If we go for the artists that aren’t making sustainable careers, we’re dealing with the 99.9%.”
How Sound works
Artists putting out music through Sound.xyz can offer a limited supply of NFTs to go along with the release. They’re souvenirs, but they also let you leave a comment at a certain moment in a given song. It’s similar to the comment functionality on SoundCloud; when an NFT is traded, a new owner can overwrite the token’s original comment.
The music itself is stored on the Ethereum blockchain, through the decentralized storage provider IPFS, and the NFT contracts are branded with the artists’ names as opposed to the company’s. (Minting an NFT through companies like Foundation or Zora leaves protocol-specific branding on the blockchain – not so with Sound.xyz.)
An alum of the University of Pennsylvania and Y Combinator, Greenstein recruited two co-founders – Vignesh Hirudayakanth and Matt Masurka, better known as the electronic musician Gigamesh – both with technical backgrounds, to set the company in motion this summer.
It’s Greenstein’s second attempt at a music tech startup. The first, an analytics company called StreamReport (now TrendPop), was his Y Combinator moment – he’s described it as a stats-based “Moneyball” approach for discovering new talent. Greenstein also has family ties to the industry. His father, Scott, is the president of Sirius XM Radio, which owns Pandora, where David once worked as a product manager.
Music NFT experiments
For the past few weeks, Sound has been selling NFTs through a set of curated “drops” – 25 comments-as-tokens tied to a single, each priced at .1 ETH (around $400). There’s also a feature called the “golden egg,” where one of the 25 collectors is randomly designated to receive an additional one-of-one token.
Oshi, Marian Hill and one-time Kanye collaborator Allan Kingdom are among the seven musicians Sound has featured so far; all seven sold their full supply of NFTs in less than a minute.
— sound.xyz (🎧,🎧) (@soundxyz_) December 14, 2021
A caveat is that Greenstein and his co-founders are currently hand-selecting the artists for these drops. Unlike SoundCloud, Sound.xyz doesn’t let artists upload their own music to the site – at least not yet.
“The last thing that we want is people to be DMing us about how to get on Sound,” said Greenstein. “And we’re very much exploring how to figure out a more scalable way to onboard new artists that is completely permissionless from our end. As for why we haven’t done that already: one, we’re brand new, and two, we’re an insanely small team.”
Sound is less than a year old, but its ambitions are grand. It eventually plans to push even harder on its “listening party” NFT drops, in an effort to make the experience of buying a token feel like buying a piece of merch at a live concert.
“I think when you mix the nerds and the culture, you get really powerful results,” said Greenstein. “The goal is to help as many artists as possible – maybe a million – live off their music.”
Disclosure: Greenstein attended the same high school as the author, but in a different class.