27th of June, the founder of Musical.ly Louis Yang and the co-founder of Ultrain Emma Liao had an online panel in Ultrain community to discuss How Does Blockchain Work with Music Industry?
Guest Speaker:
Louis Yang, founder and CEO of Musical.ly, prior product director of eBao Tech, entrepreneur. Prior Co-founder of ScrumCN. Musical.ly is a popular App that’s favored by the global teenage community, it went online on year 2014 April. Musical.ly also attracted main stream entertainment celebrity, as well as cultivating their own celebrity, who gathered millions of fans, Musical.ly has already over one billion of active online users, the first Chinese Internet product that has successfully penetrated the oversea market. It was the Top 10 app on app store, and top 30 on Google Play list. As of 10th November of 2017, ByteDance Technology bought Musical.ly short-video social community for 1 billion dollar, to incorporate it with Douyin（Tik Tok）.
Emma Liao: Co-founder of Ultrain. With over 10 years experiences of investment, investment bank, and enterprise operation, expert in cross-border M&A, overseas cooperation, and IoT industry, and benefits from extraordinary international and domestic connections and resources.
Question 1: Start of Musical.ly
Emma: Welcome Louis, and thank you for participating in our discussion regarding the consolidation between Blockchain and business scenario application. As one of the most successful global apps founded by a Chinese team, could you please tell us about Musical.ly? What inspired you to created it?
Louis: As an observer and an investor for the Blockchian, my understanding of this industry might be limited and my intention here is to simply inspire ideas and to promote discussion.
Music.ly actually started off as an educational app. We wanted to create an online community based on short internet video. After one year of operation, we realized that education itself acts against human-nature, because self-study are usually the result of external pressure that drives customers to study, whereas the internet is a place for fun and motivation, rather than pressure, thus we decided to move into the entertainment filed.
We created Musical.ly based on our short-video technology. We had a simple thought, we wanted to lower the barrier between video creation and video broadcasting, and let everyone to be able to truly express themselves. We never thought that musical.ly would become a well-known app in the average American household, nevertheless, to inspire a similar app called “Tik Tok” with more than 300 million of monthly active users. In conclusion, the result of Musical.ly as a successfully product it currently is, was never what I had in mind in the beginning.
Question 2: Operation and Oversea Success
Emma: I was surprised that a Chinese team could operate such a successful app in the oversea market with 100+ million active users. How was this achieved?
Louis: There are three key points that resulted this.
The design of this product was the perfect fit for the market. Since 2013, smartphone and wifi have well penetrated the North American market that created the foundation for the rise of short-video app.
In the beginning, we focused on the community operation and management, to encourage user participation (since 2015, there aremusical meet up events happening in the US on a daily bases, all volunteered by the online community).
We respected how business is run in the US and operated effectively. We had three large record companies as our shareholders, and developed Music.ly together. Later on, we invited few more TV network and movie company as partners of ours.
Emma: I remember when I was having dinner with Bruno Mars’ agent, and he mentioned that how record companies were all trying to avoid conflict with Musical.ly. It really shows your influence in the industry, and we really appreciate such inspiring conversation with you. Your previous experience and philosophy on community management are similar to that of our own Blockchain community management.
Louis: Yes, and the value of the Blockchain should be aligned with the value of community.
Question 3: Blockchain and Musical Social network
Emma: What is your current interests and do you think the spirit or the technology of Blockchain will push the limits or revolutionize the music and social networking industry?
Louis: I am currently involved in some early stage Venture capital investment, mainly focused on AI, Blockchain and Education. From a macro perspective, those three sectors will revolutionize the future of our productivity, relation of production and social fairness. I think there will be some great companies formed based on those three sectors.
But of course, based on my prior experience I still focus on entertainment and the content industry. I realized that Blockchain can potentially revolutionize the relation of production in content industry. For example, in the early stage of Chinese record label and music publishing industry (around year 2000), copyrights were strongly violated by pirate copies, whereas they were well protected in the US and Japan market. Which resulted the downfall of music record industry after it reached its peak at 2005 and 2006. The core issue here is due to the relation of production. From a production perspective, the technology, manifestation, ways of products are all improving, while the industry has declined continuously. Thus, the issue here is not production itself, but the relation of production, which can be expressed through three different aspects.
The development of Internet technology made it easy to copy content and sharing it online, which complicates the problem of ownership, making it difficult to account profit.
The entertainment industry is a centralized pyramid structure. The final product produced is never customized enough to satisfy millions of people online, who has their own personal taste and needs. This also limits profit allocated to the long-tail producer (less popular producers). This industry takes a toll on the producer that makes long-tail products.
There are many people play as agents in the traditional entertainment industry, which results in a rather long production chain. Creating a distance between the consumers and the creator & influencers, this delay the content generating process, while postponing personal growth of each content producer.
With Blockchain, it solves the three different issues respectively.
Blockchain naturally resolve the issue of content ownership, a concept easy to grasp. There are already projects developed to protect the ownership of published documents. As the technology improves, I believe there will be projects in the future developed for pictures and video median.
As Blockchain resolves the issue of content ownership, more long tail products will be created, as the producers can start making a living based on their products, which results in a more diverse, customized and personalized content community.
In this more diverse, customized and personalized content community, creators & influencers will be in direct contact with consumers, creating a decentralized business model with no agents. Eventually, the relationship between user/fan of the products and content creators & influencers will change dramatically, the user can become the shareholder of a content creator to a certain extent.
Such application of Blockchain can be used for the music & entertainment industry, as well as video, online reading, and even among social network.
Emma: You are right Louis. I think Guoqing Li mentioned in the group chat before, in the field of reading, video and music, a revolutionary change and potential opportunities are waiting to happen. Especially in China, the traditional entertainment and media market are rather limited, but we now have an opportunity to catch up with the more authoritative entertainment market of USA with Blockchain technology.
Of course, the infrastructure development Blockchain is still at an early stage, and we are trying to resolve such questions, and we are trying to accomplish it right now. The spirit of Blockchain and technology inspires greater opportunity within the current business. Improvement of supply and demand of entertaining production are based on revolutionary changes in the relation of production.
Louis, you have done plenty of research on Blockchain related projects, feel free to share your thoughts and prediction with us, how would the decentralized business model without agent will change the supply and demand relation of production? And the implicated influences on different platforms.
Louis: Sure, let me share an example for reference. Based on the three points mentioned above, there are some oversea Blockchain company already starting to work on internet celebrity economy project. Influence Chain is a crypto currency project based on internet celebrity and their individual influence. There is also a project in the Philippine called GCOX — Global Crypto Offering Exchange, this project price each celebrity based on their influence, letting the user/fan to be fully participated and becoming the shareholder of each celebrity, share celebrity’s potential value, and restructure the relationship between celebrity and their fans. Fans could raise money for celebrity’s public concept or even record publication. However, both projects are still at early stage, no product has been delivered to the market beside the white paper.
With projects that directly face the consumer, they usually face large transaction volume. Beside the amount of time they need to develop their product, they also need a solid and suitable Blockchain infrastructure to support their development. The development process itself is quite difficult, because it requires plenty of customized elements. A simplified public chain, such as Ethereum is not sufficient enough to resolve such issue, a more capable, flexible and user friendly public chain is needed for such application.
Emma: Yes, there are actually a similar project invested by CMC, called SNH49. The manager of SNH49 Zijie is currently involved in Blockchain research as well. Based on the discussion we had, he thinks that their product has the characteristics and nature advantage to fully utilize the technology of Blockchain and benefit from a strong public chain.
Louis: Any impressive application being developed for the consumers are all based on a capable infrastructure. This is why I invested in Ultrain, I believe Ultrain will be become such infrastructure.
Last week, I met a team of people who used to work in facebook and is starting a project called Creators Chain. I think it is quite interesting, so I personally recommend Ultrain to them and they should be in contact with you soon.
Emma: We realized the importance of infrastructure technology since day one, but the rise of infrastructure needs the creation of “killer app”, thus I have decided to contact and ask for support from the most impressive apps that I know of.
Emma: Would you elaborate on your imagination the level of influence that decentralization or revolutionary relationship of production can have on sizable platform?
Louis: I would not make a forecast on the future. Based on Nicholas Taleb’s perceptive, forecast has limited accuracy. I share a similar thought as the core theme of Antifragile, every mature business rules that we are familiar with will be revolutionized.
Emma：Thank you, I see your point. There is quote from our chief architecture Yufeng, “when working with Google and Alibaba, my target at work was to push the boundaries of business model” I think this is why we have dedicated ourselves into a technology start-up.
Emma: As a final remark, could you please give Ultrain some suggestions? Thank You!
Louis: Regarding Ultrain, I have no further advice on your technology and products, as you already have the best tech team on board, and a clear development path for your products. All you need now is to continue your way down the path. In terms of operation, with Emma’s personal influence and charm, it should not be difficult to build a solid community. I do have a little advice for the community, embrace such opportunity provided by Ultrain, and develop your super Apps with the support of such impressive infrastructure platform. A great platform relays on the birth of popular application, thus Ultrain needs to discover the next few killer Apps and support its development, which results a Win-Win situation. This is probably the best way to benefit and profiting from the rise of a platform, maximize the technology value and profit of developing a platform.
Emma: Thank you Louis, The point that raised here is the same one that I had in my mind since day one and an issue we have been trying to resolve. Although the relationship between the technological bottleneck and popular app is similar to that of chicken & egg, but this does not prevent us from exploring and trying to resolve it. I believe in the near future, more and more applications will be accomplished, which enlighten even more impressive App developers and entrepreneurship with new thoughts and inspiration.
Post Discussion and Feedback
After discussion between Louis and Emma, Guoqing Li (Founder and Chairman of dangdang.com) introduced his decentralizing reading platform. And they have the core team members in place, two from Aamzon, two from Alibaba, four from dangdang.com. The early stage focus for them will be based on the content. Besides Guoqing Li, Haiquan Hu (famous musician and Founder of Haiquan Venture Capital) said he was swamp with meeting all day long, but still paid attention to the discussion and would like to learn more about blockchain.
Ray Guo (Co-founder of Ultrain) : Very much appreciate Louis’s view, you truly pointed out the bottlenecks of the industry, let us all look forward for the day when content generated economy is well incorporated with internet celebrity economy and develop Killer Apps for the world.
Yufeng Shen (Chief Architect Of Ultrain) : Thank you all for sharing! There are two key takeaway points for me: 1) Blockchain deliver more opportunity to long-tail content provider and more incentive to them directly; 2) Benefit of Internet Celebrity Economy, from projects such as SNH48, it is easy to see there are still innovative ways of utilizing the token structure.
Emma: I would like to thank Louis for sharing his view with us, also Guoqing Li and Haiquan Hu for participating. Guoqing Li has already started his establishment in decentralized application, and he sees this opportunity as a venture for the next 8 years. This is the type of attitude we need in this industry. We firmly believe, regardless of how speculative the market has been, the team will dedicate themselves to create something solid and provide value for society. In the end, we believe the value driven project will more likely to be recession proof, market proof.
(Translated and edited by Ultrain)
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