Music DAO Deep Dives, Pt. 2: Sone’s vision for public music goods

This breakdown is part of an ongoing, members-only interview series focused on artist and label DAOs, as part of Season 1.5 of our ongoing collaborative research on music and Web3. The goal with this project is to make collective sense of the emerging, fast-moving ecosystem of music DAOs — not only giving structure to the current landscape and future possibility space for music DAOs from the perspectives of function, tech tooling and organizational design, but also identifying critical needs in the landscape that are still going unaddressed.

All interviews in these series are conducted and written by members of the Water & Music community, and follow the same format of breaking down a music DAO’s approach to community design and onboarding, tech tooling, governance, treasury management and more. Core contributors lead weekly, members-only research calls every Wednesday in our private Discord server to dive deeper into takeaways from these interviews.

Sone is a music DAO spun off from the longstanding indie record label Topshelf Records. The ultimate vision for Sone is not necessarily to build a “Web3 label,” but rather to produce public goods for music. Their Discord server, which is open to the public, currently has just over 200 members.

For this project, we interviewed the DAO’s two leading contributors, Kevin Duquette and Zach Miller.

Our main takeaways:

• Broadly, Sone’s goal is to explore new, blockchain-enabled models for building sustainable music communities. To begin with, Sone is working to develop Tone, a streaming protocol that will pull music from the APIs of existing streaming platforms (Bandcamp, SoundCloud, Catalog, Audius and more), and will compensate artists per play. Tone’s pricing model will be pay-what-you-want, representing an experiment in altruism around music streaming.

• The long-term goal is for Sone to grow a broad community around a self-functioning organization, such that its current leading contributors (Kevin & Zach) are no longer managing operations from the top.

• Core values (equity, fairness, openness and interoperability) inform everything that Sone does, from its design for the individual public goods that the community produces (Tone streaming protocol), to the governance and tokenomics of Sone itself (they are planning to use a unique Harberger tax model — more below).

Sone began as an offshoot project of Kevin Duquette, who runs the independent label Topshelf Records (founded in 2006). Topshelf has grown its community purposefully over 15 years, and is focused on supporting artists in doing exactly what they want to do with their art. Kevin is also a technical founder, with a background in front-end coding and web development.

Sone is still formulating what it will ultimately look like in real-time, and thus does not want to box itself in with a conclusive definition of what exactly makes a DAO a DAO. The core team recognizes that Web3 is still in its early stages and growing by the day, and that there are both advantages and risks associated with building in Web3.

It’s for this reason that Kevin chose to keep Sone as a separate project from Topshelf on the organizational level. While he intends to launch some Web3 projects under Topshelf, he is taking a learn-first approach and communicating closely with roster artists before launching anything official, as he believes it would be irresponsible to simply experiment with the livelihoods of Topshelf artists in the process. Sone does not currently have any formal legal structures associated with it, but Kevin anticipates needing to understand and work through the legalities of being a DAO, as well as dealing with any issues that might arise from the use of proprietary information for their streaming protocol Tone.

For Sone, the overarching idea is for the organization to become a sustainable community that works together to create public goods in the music sphere.

In the medium to long term, the idea is to use a novel tokenomics structure based around a Harberger taxto ensure that no single individual or organization is able to come in and buy up all the equity as the community grows. This model will ensure that interested individuals need to contribute to the community in order to earn equity, and maps back to the organization’s core values (equity, fairness, openness). Ultimately, their intention is to have any value created through Sone flow back to those who contribute to building the community.

Tone: Feedback loop between artist curation and public goods funding

There will be two sides to Sone: The public goods side, and a second curatorial side where the community commissions artists to produce art for various Sone projects, including for membership NFTs which are an essential part of the Harberger tax membership model. Commissioned artists will automatically receive tokens amounting to membership; in the case of their art being used for a membership NFT, they will also receive a percentage of membership fees for that NFT over time.

In the short term, Sone’s main project — and the first of its planned public goods — is Tone, an open-source music protocol that allows users to curate music from multiple platforms (Bandcamp, Soundcloud, Catalog, Audius, Nina, Sound, Zora and more to come). Hence, the curatorial side of Sone will directly support their public goods side.

The protocol will be pay-what-you-can-afford, and artists will be paid per play. 80% of fees will go to artists whose music played via the protocol, 10% of collected fees will go to the streaming platforms backending Tone and 10% will go to fund future Tone development and the Sone public goods treasury.

In the short term, the Sone team has found it difficult to get into a rhythm towards the development of Tone, which comes with its own matrix of complex challenges like artist verification and rights management. Some of these problems may be solved by upcoming grant applications to grow the Sone treasury, which would allow for the implementation of rewards for contributions and incentivize more consistent building. That said, Kevin and Zach also foresee a learning curve around developing a fair system around rewarding contributors, and how to value different types of contributions — a necessary growing pain for many DAOs.

Community: Products as tangible expressions of values

The Sone community is still very nascent. While it would be easy to look at its Discord membership and see many of the most active people from the Web3 x music world, most members are just observing, or checking in on the project periodically. At this point, Sone is mainly a small group of developers and participants having conversations about what the project could evolve into over time. The starting point has been building out Tone as a community. “No effort has been made to leverage the label’s [Topshelf Records] existing audience to this point and it’s important to us to maintain impartiality in the artists sone partners with,” says Kevin. “We encourage anyone in the Topshelf audience or roster to get involved, of course, but this is not something we are actively seeking out.”

One thing that Kevin and Zach have noticed is that a lot of DAOs form without a clear product or service in mind that people can actually use, and worry that this can lead to a lack of purpose.

With Sone, the thesis is that a focus on building music-related public goods products and services will naturally attract and grow a surrounding community. Having had the same conversations about the possibilities with Web3 skeptics over and over again, the Sone team believes that many people simply need to see a working product that lives up to the values being cited as foundational to Web3, and that this will ultimately pull many people into the ecosystem and into the Sone community in particular. Zach notes that “the idea should be to make something that’s actually usable for real people,” which is why Sone’s immediate focus is on producing and implementing a working version of Tone.

Governance: Taking it slow

Overall, the biggest pain point for Sone thus far has been the complexity involved in developing an organizational structure and tokenomics plan. DAOs operate in a complex system, and it’s essential to build Sone to be resilient against attacks and bad actors.

Sone is purposely taking the implementation of governance slowly, while also thinking deeply about it and planning for the future. “You can’t just throw governance on people and say go,” says Zach, before noting that they are wary of simply minting a token and launching it, without first having formed a strong community that believes in the values underlying the organization.

The hard line that Sone will not cross in thinking about governance is that they do not want to receive any funding (external or otherwise) that binds how Sone will operate. There will be no mechanism to simply buy your way into the community, nor simply to purchase “voice” in Sone.

The goal is a truly equitable foundation, with no membership or governance squatters. Their ideal membership includes a highly curated list of artists making really transcendent work, though they note that their planned governance model will make Sone fully open to whomever wants to contribute to the community, which is a key part of Sone’s underlying values. While currently Sone is a bit of a benevolent dictatorship, the ultimate goal is for the organization to become self-sustaining, with Kevin and Zach acting as regular community members, rather than leaders or figureheads for the project.

Kevin and Zach have been thinking deeply on how tokens relate to what the community is doing and how it will evolve, which has led to the Harberger tax proposal mentioned above. They both recognize that implementing this model will take place in the medium to long term, but that thinking through all of its implications and the incentive structure clearly is essential work to start now. They worry that tokens can too easily become gamified, profit-seeking tools for people who are not altruistically inclined, and acknowledge the importance of clear thinking in limiting this effect.

The Harberger model, which is quite complex, is a play on a membership model that sees community members renting a membership via an NFT for a fee across time (a la ENS names). Memberships always stay liquid, and can be purchased off of individuals by others at any time. While holding a membership, community members can participate in Sone and work for the community to earn the fungible SONE token. In this way, membership NFTs become a fluid gate through which potential community members gain the ability to come in and earn the SONE token via contributing to the community. (NOTE: This is a very simplified description of the Harberger model; we highly recommend referring to Sone’s full working governance diagram of this system, which is shown, in part, below).

Tech stack: Bottom-up, modular tooling around social identity and governance

Sone does not currently have a token, nor does it use any specific tools for DAO governance at this point. However, they are exploring many different tech tools to help unlock the potential of Tone and Sone (e.g. Unlock Protocol for sign-ups to Tone, Ocean Protocol for data and Radicle Drips for membership NFTs). Kevin and Zach also anticipate plenty of movement over the next few months around the social layer of Web3 (for example, platforms such as Backdrop, Context), which could be useful to the development of Sone, especially from the perspective of moving away from exclusively using Discord to communicate and organize.

Other areas they are keenly monitoring include Gitcoin’s launch of tools for quadratic funding and voting, the development of native, cross-platform splits for NFTs, overall NFT metadata standards and the development of identity protocols and tools to protect the community against attacks from pseudonymous users. They are also hoping for Web3-native options for data storage (i.e. IFPS) to become less expensive over time, as it is currently much cheaper to use Web2 services like AWS.

The specific tools for enabling governance of Sone will be implemented once their full governance plan is determined and launched. For tooling, they would favor a bottom-up, modular approach, as it allows for a DAO to pick and choose what tools will best suit their setup and allows organizational culture to bubble up and dictate the best tools and structure. In contrast, an all-in-one tool limits an organization to a very specific type of governance setup.

Treasury/Finance: Exploring cross-DAO co-funding projects

As mentioned above, Sone’s key value proposition for the treasury is to ensure that they build from an equitable foundation, without taking money from any organization that will bind how they operate. In the short term, they hope to grow the Sone treasury via applying for development grants. Treasury governance will slot into the overall Harberger tax model, with community members who contribute and earn Sone receiving governance abilities. Within this model, they will also ensure that artist contributors receive ongoing royalties for their contributions (e.g. a percentage of NFT membership fees, or other forms of remuneration).

As an organization, Sone is very open to working with other DAOs on projects. The goal would be the co-funding of public goods across several communities.  With this in mind, Sone would also like to gift Sone memberships to other DAOs working in the same domains, to ensure that those communities also have a voice in how Sone’s public goods develop. The model would likely allocate a single membership per DAO, giving the receiving DAO a small voice in Sone.

All in all, the biggest mistake Kevin & Zach mentioned having made along the way was being much too private and reluctant to share their thinking in public and to engage with the community to contribute to this thinking. The lesson they’ve taken from this is to broadcast every idea and not worry if someone else takes it and builds it — because the goal, either way, is ultimately for it to get built.