Music DAO Deep Dives, Pt. 6: Why AmpledDAO does not exist (yet)

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 break 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. You can read our previous installments on SongADAO, Phlote, Mudd DAO, Sone and Dreams Never Die.

Ampled is a digital cooperative building a paid membership platform that is 100% owned by its artists, workers and community. Founded in 2019 by a group of designers, software engineers and musicians, Ampled helps artists gain sustainable and predictable income in today’s streaming economy. The cooperative is currently incorporated as an LLC, and is evaluating a DAO structure as a means to give the organization more long-term financial sustainability. They were part of Cohort 3 of the Seed Club accelerator in mid-2021.

For this project, we interviewed Ampled’s founder, Austin Robey.

Our main takeaways:

• The AmpledDAO project is currently on pause. The shared digital public goods proposal for the Ampled coin is currently on ice, after getting right up to the line of approval.
• The primary bottleneck is the gap in understanding from the community, and subsequently the amount of work it would take the team to educate the community about the intentions and mechanics behind the DAO. Cultural buy-in, Web3 literacy and the community’s willingness to experiment are important factors when considering whether or not to implement the DAO.
• Longer-term, Austin remains a cautious optimist, and believes DAOs present the opportunity for collective ownership of organizations and inventive ways to bootstrap networks with contributors. In addition to experimenting with AmpledDAO, Austin is applying his learnings from coops and DAOs as he builds other organizations like Dinner DAO, a distributed community organizing IRL dinner experiences funded by membership NFTs, and Metalabel, a Web3-native research lab and “Gitcoin for culture.”

The underbelly of our conversation with Austin, and in our entire interview series at large, is the question of “why DAO?” A lot of the answers to this question center around governance, and with Austin’s history of running decentralized organizations with and without Web3 rails (such as cooperatives).

So, why would you need to organize a community, a group of people, into a DAO? Let’s go back to Vitalik Buterin’s definition of a DAO from 2014:

“A DAO is non-profit; though you can make money in a DAO, the way to do that is by participating in its ecosystem and not by providing investment into the DAO itself.”

This element of participation seems key, and is again closely related to cooperativism. As an active contributor to several DAOs including Protein, Forefront, Seed Club and Friends With Benefits, Austin lives and breathes this participatory ethos. What these activities have taught him is that there are various ways to build community in Web3, and that working towards shared goals brings out the best in groups of people.

Ampled in particular is already building a thriving community and governance structure around their core product. The level of clarity and detail in their decision-making matrix — covering who in the community (e.g. artist-owners, contributors, all members) is responsible for leading different decisions across the coop (e.g. hiring/firing staff, business/growth strategy, new artist approval), and how they arrive at those decisions (e.g. democratic vote, delegate vote, consultations) — would be the envy of many DAOs today.

So, wouldn’t it be a logical extension for Ampled to make the switch from cooperative to DAO? Well, not quite.

On barriers to entry

Significant barriers still exist to stewarding a Web2 community smoothly into Web3, which is what would need to happen with Ampled. There are, of course, barriers to cultivating Web3 tech literacy, where all members of the community would need to be educated on topics from onboarding to governance and tokenonomics. The amount of work it would require to explain and educate the community on these topics would arguably be a distraction to the organization’s core team.

However, Austin sees those technological barriers as minor compared to the financial and cultural challenges. The main barrier Austin perceives is around gas fees; he believes it would be impossible to convince people to pay additional fees for transactions such as donations or subscriptions between a band or musician and a supporter. These are generally small amounts that would potentially be eclipsed by the gas fees necessary to confirm the transaction on a proof-of-work blockchain such as Ethereum. While using blockchains other than Ethereum could reduce fees, Austin believes this would only add complexities to onboarding Web2 members.

While topics like gas fees are economic issues, the stories told around them are cultural. Trying to explain the overall benefits of a DAO structure for Ampled and the community of artists within the coop requires changing those stories. Right now, Austin sees that as too big a hurdle. The artists who are part of Ampled also work within legacy music structures, and have come together as a coop to set up a buffer for themselves against some of those networks. These are, then, not Web3- or crypto-native musicians, and for them to switch models requires more than a promise of decentralization and equitable distribution.

Perhaps this sentiment will change once more concrete examples come through of communities switching from Web2 frameworks to Web3. Austin has therefore followed with a strong interest how Water & Music has done this with their Web2 community over the past couple of months. That said, the W&M community is perhaps a more early adopter-style community when it comes to tech than the musicians who are part of Ampled. (The Ampled coop has yet to vote up or down on any proposals related to transitioning to Web3.)

On governance

What’s striking about these barriers, and the way Austin talks about them, is that on the face of it, the step from a cooperative to a DAO would seem natural.

Kei Kreutler, who leads strategy at Gnosis, put it like this (emphasis added):

DAOs embrace cooperativism as a protocol, meaning an evolving set of relational practices that are distinct from traditional corporate structures or decentralized autonomous corporations, because they prioritize member ownership.” Kei also notes that “DAOs can learn from cooperatives’ emphasis on long termism, through establishing more cultural patterns around token vesting, limited transferability, or more experimental mechanisms.

When you look at the concept of “cooperativism as a protocol,” a key element for Austin is that of a shared set of principles that drives those relational practices. Studying different models of DAO governance reveals potential conflicts of interest with a cooperatist ethos. Namely, while a coop voting structure is traditionally one-person one-vote, Austin claims that DAOs tend to favor one-token one-vote models. Although DAOs reason that token ownership represents stakeholdership, this allows DAO members with greater financial stake to have proportionally greater influence. In comparison, coops are more egalitarian and fair for Austin because of the strict one-person one-vote structure of governance. (To be fair, Austin is not alone in his thinking here: Two other DAOs we interviewed previously in this series, Phlote and SongADAO, are also hoping to implement one-person one-vote governance systems using Web3 rails).

On balance, Austin believes that governance can be designed to fit each organization and their needs. Aside from one-token one-vote, another example includes quadratic voting, which enables individuals allocating votes to express the degree in addition to the direction of their preferences. Again, this isn’t a form of voting that is unique to DAOs; Ampled has also recently experimented with quadratic voting in their coop structure. What this method of voting offers is a potential middle ground, as it measures the passion that people have for certain proposals and diminishes the influence of whales.

On resources

As he recently wrote himself, Austin believes a fusion of Web3 and cooperatist principles could be the way forward to create successful decentralized human organizations. For both DAOs and coops, value lies in the active participation of community members. However, DAOs are better primed to create more explicit financial value from within, through whatever (digital) assets they organize around, while coops focus on building a safety net for their members. The latter have never aimed for increasing financialization around its memberships; while plenty of DAOs, Friends with Benefits being the most famous example, let their token rise in value, a cooperation pools resources to be able to compete against more well-resourced private companies in their market. In his article, Austin highlights the ability to bootstrap a cooperative through a token as a key element where coops can learn from DAOs in terms of financial sustainability — that is, if they can get over the initial financial and cultural barriers to entry first.

The problem of resourcing cooperatives has been a repeat issue throughout the movement’s history. In the second half of the 19th century in Germany, two divergent strands of cooperativism emerged that showcase this issue. On the one hand, there were coops that accepted some state help, mainly in the forms of loans with favorable conditions of payment. On the other hand, there were the coops who remained strictly self-help and eschewed all forms of state (i.e. centralized) aid. It’s important to note here that by the end of the 19th century, the former group of coops had become ever more centralized entities that had completely changed the governance structures of the original organizations. The latter, conversely, managed to retain ownership of their produce — these were mostly farming coops — and through the power of their community and network were able to hold advantages with highly industrialized competitors.

So while DAOs require a legal entity, such as an LLC, to operate in the analog ownership economy, they can give the power of creating internal resources to communities structured around cooperative ideals. In both DAO- and coop-driven forms of organizing community, humans are close to, or an integral part of, the decision-making processes. The ability to bootstrap those processes from within through a DAO token then brings the community together as an economy on a human scale.

On incentives

Austin’s involvement across multiple DAOs has informed his view on incentive alignment associated with member contribution and tokenization. Participating in Forefront, for instance, he has observed how economic and coordination tools strengthen rather than degrade the health of the community, and help people feel compensated and valued.

Austin also noted how Ampled’s contributor hours could be applicable to tokenomics and coin distribution, with hours having analog value and liquidity and becoming tradable, interoperable and portable (through incentives such as badges with contributor tokens).

Looking forward, Austin notes that what’s next is what’s missing. Although there has been progress in Web3 overall, Austin believes the ecosystem could be more inclusive and less reactive. And while there has been talk about building a new system in Web3, the winners of the previous system — namely, more Web2-native venture capitalists and big-tech firms — are arguably still leading the charge. He would like to see others push boundaries to serve needs beyond the dominant neoliberal, market-oriented paradigms, and towards narratives and objectives in support of individuals’ basic needs. He believes that tools for coordinating and rewarding communities should serve people first and foremost rather than capital. Overall, Austin is optimistic about how Web3 provides the space and tools for communities to question, reorient and ultimately redesign the way they come together.