2 AltMarket: the XTO Roadmap Version 0.3 Defining the future of the business of music Humble beginnings. When the idea for Tao Blockchain asm for our project, and we formed (symbol: XTO) was born in late a strong business relationship with 2014, our goals were aggressive DigiRAMP.com, a working rights but simple: develop a rights man- management platform serving the agement solution suitable for dai- music and entertainment indus- ly use by both professionals and tries. amateurs. In early 2016, the Tao Once we’d assembled all of the Network project was born when components required to imple- we formed our initial partnership ment a successful new platform, with Boogie Shack Music Group. we came to a shocking realization: rights management applications This vital relationship allowed us had no place within the music to take a vested financial interest industry without proper mon- in the operations of a profitable etary incentive. Some blockchain business within the music indus- projects have since attempted try, while at the same time gaining to address this issue by creating direct access to the day-to-day op- complex profit sharing schemes, eration of the music supply chain. however all blockchain projects In August 2016, we launched the have the same friction for adop- Tao Network (symbol: XTO) crowd tion, regardless of the blockchain sale and raised $100,000. This used. This friction compounds crowd sale marked the culmina- a problem which already exists tion of three years of effort within for rights management platforms both the music and blockchain WITHOUT a blockchain. There are verticals. The first quarter of 2017 already several rights management ushered in a new wave of enthusi- platforms that perform the exact
Version 0.3 AltMarket: the XTO Roadmap 3 same service that blockchain applications provide, however they are by and large not profitable. Adding a token-based eco- nomic scheme simply doesn’t solve the basic supply-and demand-problem that rights management faces, itself. The problem, at first, seemed unsolvable until one afternoon the CEO of Boogie Shack, Hakim Draper, and the founder of Tao Network, Bryce Weiner, were having a conversation about the XTO. The solution suddenly became self-evident. Years of While the Tao Project (symbol: XTO) has only existed since 2016, andria. While this platform itself wasn’t suitable for economic use, experience. it represents over three years of hands on experience in both it did begin the exploration of media applications for blockchain Years of blockchain applications and the business of music. technology years ahead of anyone else. relationships. Some of our earliest projects It was our music business experi- invovled design of the “dApp” ence that told us a better solution the Distributed Library of Alex- was possible.
4 AltMarket: the XTO Roadmap Version 0.3 Learning the Music Business Assume nothing. Our relationship with BSMG gave video games, etc), and merchan- those aged 13-18 account for over the Tao project unprecedented dising. Merchandising is an enor- 30% of global music revenues. access and mentoring into the mous category which ranges from Minors are an age category that functioning of the business of clothing, to posters and artwork, blockchain-based platforms almost music. We were able to partici- to specific brands of alcohol or, universally exclude by not respect- pate directly in artist development in more recent years, marijuana ing who actually buys music and how known as “artist and repertoire” products. Within the merchandis- those individuals would gain access or “A&R,” for short. This is an old ing royalty stream a great deal of to the network’s services. practice of curating and devel- flexibility may be expressed as to oping an artist or performer to how revenue is generated, and one Rights management and all develop their unique style into a need only search their favorite other proposed schemes using profitable brand. This brand then artist on eBay to discover a vast blockchain technology are in- becomes the long term residual market of commemorative collect- tended to slant the flow of ex- income that truly provides for an ibles. isting funds from the current artist’s lifetime financial suc- parties to a new scheme, but cess. The cryptocurrency space Blockchain Has It Wrong none are actually creating any is all too familiar with profitable Blockchain technology is the new value for the music supply hype cycles, and an artist experi- answer to the problems of the chain. A cost benefit analysis ences similar cycles throughout music industry, but perhaps not of any given blockchain solu- their career. The execution of a as is commonly described. Every tion incurs a resounding net long-term branding and marketing single blockchain-based platform negative when viewed within strategy smooths out the “boom for the music industry is either a the perspective of how and and bust”/“feast or famine” cycle copy of a model that isn’t prof- why money is actually made in of producing art and allows cre- itable, competes with a wildly the music industry. ators to make a living doing what profitable incumbent, or is only they love. profitable for early stage investors Traditionally this additional in- in the off chance the platform is come is from live performances, ever developed and achieves use tours, featured appearances, syn- at scale. Furthermore, accord- chronization licensing (TV, movies, ing to IFPI’s 2016 report, those
Version 0.3 AltMarket: the XTO Roadmap 5 Putting It in Perspective Quite simply, moving money is the only thing a block- chain has ever done successfully at any scale. Accepting that simple fact, one may then observe the With the coming of regulatory oversight, the current blockchain space and how it has evolved since 2010. market of Initial Coin Offerings has already begun to We have seen an exponential increase in blockchains demand lower risk, regulatory compliant products and and tokens to the degree of thousands now in exis- platforms which reduce the friction to on board new tence, with hundreds more being created monthly. participants. Any solution for music not only requires The market has not only supported this explosion, all of the above, but must then struggle to “rise above but created specific infrastructure and regulatory the noise” of the cryptocurrency space, itself. What compliance practices in order to cater to it. This goes begins as a noble and well-intentioned desire to cre- beyond the exchanges, but extends to the evolution of ate a service for creators quickly devolves into a pro- technical analysis, price discovery, and social media tracted up-hill war of attrition, on not the front line of promotions which have evolved to a very nuanced set one industry but two. of profitable behaviors. Discover the value hidden in your brand.
6 Company Proposal Enter your Project Case here Everyone’s Solution The solution for the music industry is the solution for the cryptocurrency space. A simple, intuitive, fully regulatory compliant interface required for any blockchain project also serves as a simple, intuitive, fully regulatory compliant on-ramp into the crypto- currency economy. The opportunity to serve both industries at once suddenly reveals itself. Exploring that relationship further based on what we already know about both industries, and our first music industry-accepted blockchain application was born. The solution is simple: a fully regulated cryptocurren- cy exchange which is able to issue officially licensed and branded products for sale to the public as peer- to-peer tradable collectible tokens. Once the market is created, it may then present Initial Artist Offerings (IAO), a new form of token sale which is within 100% compliance with existing SEC regulations and guide- lines. IAO tokens are the 21st century’s answer to the base- ball card or commemorative coin. The blockchain record creates a historical chain of events which we call “Proof of Fan.” The incentives an artist may offer to their fans becomes an ala carte menu of fan inter- action, from free shows to face-to-face meetings to more traditional items like t-shirts and posters, which is limited only to the creativity of the artist. Not only the quantity of tokens possessed may be considered, but also the length of time one has owned a token. The entire history of support and interaction of a fan with their favorite artist may now be monetized, creating entirely new value both monetary and in the experience.
Version 0.3 AltMarket: the XTO Roadmap 7 The Initial Artist Offering (IAO) Safe, fraud free markets Exchanges with integrity, putting customer service first Regulatory compliant cryptocurrency finance products Frictionless access to all participants in the music supply chain from artists to consumers, including minors Clear business positives for use of any new technology, not simply ambiguous claims of “better ecosystems” or “disruption” Being able to demonstrate actual benefit to those whom the product is intended to serve: artists and their fans Consists of a collectable, limited issuance of a cryptographic token Bears unique artwork, similar to that of album art Has no intrinsic value either expressed or im- plied Officially licensed and branded merchandise
8 AltMarket: the XTO Roadmap Version 0.3 Constructing an Economy Market design for IAOs will bear many of the same traits as traditional Initial Coin Offerings and cryptocurrency launches, with certain exceptions. Most notably is that every token offering is officially licensed, reducing the amount of due diligence required for risk assessment to zero. Every single offering within this ecosystem is 100% fraud free. The manner of analysis of IAOs is reduced to two primary catego- ries: economic variables and price discovery. All offerings will accept USD, BTC, ETC, and XTO. Participation in offerings using XTO will receive an automatic 5% discount. Economic Prospectus Clear, consistent metrics for evaluation of each offering, including but not limited to: total token count, offering type, base network, and disburse- ment schedule. Price Discovery New metrics for monitoring the real time success of an artist’s career based on sales performance, touring, and media coverage. XTO Markets Special XTO base pairs allow for secure trading of celebrity brands for all ages of consumer. XTO Adoption We seeded the music industry with XTO at no charge, in order to allow indi- viduals direct experience with cryptocurrency technology and its financial application.
Version 0.3 AltMarket: the XTO Roadmap 9
10 AltMarket: the XTO Roadmap Version 0.3 Price Discovery as Artist Business Analysis In traditional financial markets, price discovery is a function of basic supply and demand factors related to the market. The IAO structure offers several metrics from the music industry which are used to create composite scores known as the Fame Demand and Fame Potential. These two metrics allow for a snapshot view into the art- ist’s ability to monetize their fan base through traditional methods thereby providing some context for the appeal of the collectible token representing that artist. 1 Presence Presence is determined as a function of social media followers, weighted against the specific platform due to the variance in performance of each network tracked. Social media platforms to be tracked include: Facebook, Twitter, Instagram, Snapchat, Spotify, Pandora, Deezer, SoundCloud, and YouTube. 2 Notoriety Notoriety is a simple moving average of the number of times per week that the artist is mentioned in the media. This metric is curated by the AltMarket™ team from a variety of sources, and each which contributes to the computation will be accounted.
Version 0.3 AltMarket: the XTO Roadmap 11 Where attention goes, money flows. Discover what is capturing attention. Fame Demand is a weighted average composed of three computed scores. The application of weighted aver- ages allows for the quantification of an artist’s career in comparison to their peers through the same metrics used by the music industry, itself, albeit in a slightly different format. 3 Performance This metric is variable based on the medium of the artist, however it is a weighted aver- age of the number of public performances and the attendance of each performance. This metric includes syndication when such data is available. 4 Potential Once the AltMarket™ platform is online, the Potential metric will provide a simple mov- ing average of the changes in an artist’s Demand in various time scales. Potential then serves as an indicator which may show an artist breaking out before the markets reflect the change.
12 AltMarket: the XTO Roadmap Version 0.3 The Tao of Music: The New Record Executives Masternodes: The 100K Club Exclusive Access Given the network economics, there will only ever be at Tao will implement master nodes in 2018 with a mini- most 320 members of the 100k Club. This exclusivity allows mum operational requirement of 100,000XTO. This us to provide a top-quality experience for those super fans “100k Club” will not only receive long term payments of the network. Bryce Weiner, founder of Tao Network has from the network, but will also entitle those operators described the 100k Club experience as to be compared to to special access across the AltMarket™ ecosystem. “Playboy lifestyle, if you got to be Hugh Hefner.” This includes: The 100k Club become the new record executives, with exclu- • Exclusive events and promotions sive access and funding opportunties for the hottest artists • Backstage passes in entertainment. • Hanging out with celebrities
Version 0.3 AltMarket: the XTO Roadmap 13 Serving the whole market The Tao Network is also crime-free, allowing it to be suitable for use for minors who traditionally do not have access to banking services. Special mobile wallets and promotions are under development which will allow those under 18 years of age to participate the cryptoeconomy while at the same time supporting their favorite artists. This unique economic design provides a safe lane for involvement in the cryptocurrency experience for some of society’s most vulnerable consumers. Even without trading, the 4% annual returns for participa- tion in network consensus (Proof of Stake) provides additional means of participation for minors in learning Cryptocurrency, The Old-Fashioned Way how cryptocurrencies and general economics operate. After the crowd sale, our primary tives, music technology CEOs, sound focus was demonstrating our and recording engineers, and artists technical abilities in implementing to cryptocurrencies. We seeded the in- music industry solutions utilizing dustry with XTO at no charge, in order blockchain technology. to allow individuals direct experience Unknown to most of the industry, our with the technology and its financial team secretly “leaked” our unpub- application. By October of 2017, a lished technical white paper in January non-trivial portion of the music supply of 2016 which outlined our engineering chain is holding a vested interest in design. In November of 2016 we filed a XTO. We have taught dozens of music provisional patent which was granted industry professionals how to install for the administration of rights man- and use Bitcoin wallets. We have, agement utilizing blockchain tech- quite literally, increased cryptocurren- nology. While the industry pursued, cy adoption within the music industry various solutions based on our design, in order to prepare the market for our we began introducing record execu- applications and products. XTO Markets While US dollar and Bitcoin trading pairs will be offered, they will be AML/KYC restricted. As such, AltMarket™ will enable trading of Artist Tokens against a XTO trading pair. This provides direct access for minors, while at the same time providing significant arbitrage opportunities. This provides the added benefit of allowing XTO early adopters a significant advantage in which artists gain the most market support. By design, this allows for XTO holders to literally become the next generation of music executives.
14 AltMarket: the XTO Roadmap Version 0.3 Making It a Reality While the requirements are simple, execution is no small endeavor. Steps 1 & 2 were cleverly combined through the efforts of Hakim Draper. Each legal agreement was celebrated by “making it rain” on everyone in the room and awarding them between 5,000-25,000XTO tokens without reason or ceremony. This demonstration allowed those decision makers the opportunity to directly experience the powerful network effects of cryptocurrency first hand, and without creating a conflict of interest. This paved the way for the third step, which involved the appraisal of music industry executives of the current state of cryptocurrency infrastructure. Suffice it to note that the quality and standards were found woefully lack- ing. Furthermore, of all existing platforms evaluated, none met the due diligence of intellectual property attor- neys. Drawing from that feedback, the design of AltMarket™ caters towards a unique experience in the crypto- currency space focusing on customer service and regulatory compliance. Our strict implementation of AML/KYC allows for the participation of 13-18 year olds in special markets, with funds “unlocking” upon their 18th birthday.
Version 0.3 AltMarket: the XTO Roadmap 15 1 2 3 Legal Compliance Economic Design Platform Development Our legal team will vet every An ala carte menu of options AltMarket, Inc. is in the process single project to be listed on Alt- become available for artists to of developing the exchange Market™, as well as provide the implement their token within the platform with the assistance necessary legal due diligience to economic systems which cur- of several well-known compa- certify each celebrity token as of- rently exist within their fanbase. nies within the cryptocurrency ficially licensed merchandise. New opportunities will become space. apparent, with ever increasing rewards for fans!
Ready for your brand to join the crypto-economy? Let´s get started. www.alt.market Address AltMarket, Inc. 10713 Burbank Blvd North Hollywood, CA United States Contact Us Email: [email protected] Phone: + 1 805 944 2178 Twitter: @_altmarket Website: www.alt.market