Matter

For the Culture

$44.6 billion

In 2017,

$156 per year

of which the average US person over the age of 13 spent

was spent on music,

8

The legacy structures of the industry make profitability impossible.

Spotify and similar music services are obligated to pay the labels to license the music of their artists, which creates a massive obstacle to profitability.

— As a result, they have to find listeners who pay for the platform but use it very little to attain profitability.

— This directly competes with their free music platform, which is ad-supported.

Furthermore, the consumer preferences of music listeners is so individualized, and the consumer behavior so fragmented, that no platform can capture all value across the various engagement channels.

— No incumbments have successfully pursued strategies to broden their revenue base.

Incumbents have had little luck overcoming structural barriers to profitability

Spotify has only ever had 1 profitable quarter, which they’ve stated was by accident. ³

Sony, Universal, and Warner recently sold their stake in Spotify. ⁴

Soundcloud is a dead platform. ⁵ 

The community died because it wasn’t revenue generating.

Radio, once the dominant player, has been eclipsed both culturally and financially. ⁶

Nobody uses Pandora, demonstrated
by a 6% decline in users YoY. ⁷

Meanwhile, only the labels have managed to stay profitable, mostly through a decades long process of merging and acquiring their competitors. ⁸

We are nowhere.

What is the future of music streaming?

Enter: Matter

Our payment processing is instantaneous and our payment structure fixed, removing the obstacles of having to negotiate licensing fees.

Matter is easily scalable and runs on less than incumbents.

Our culture-forward approach allows Matter to capturing market share in various verticals by expanding into social and commercial verticals.

Matter can actually pay labels and artists more, giving them massive financial incentives to use Matter’s platform rather than established incumbents.

Our vision sets us apart

In a world where everything has become a commodity, we created a platform where the rarest thing is inherent in the identity of the platform: authenticity.

People desire to be a part of the next big thing, the next cultural wave. By serving the independent artist: the trendsetter, the renegade, the person who lives on the edge of what is possible, we create a relationship between the listener and the artist that pushes the boundaries of what we know.

By focusing on the future and creating a platform that allows people to explore, we create a community that not only works, but never has existed before.

The platforms today created a set of consumer behaviors that accelerated fragmentation. We each have our own individualized desire to find something that appeals to us.

Matter disrupts the current industry

Matter built a platform for an underserved market segment that is poised to become even larger.
By making it profitable and revenue-generating for the vast majority of creators, none of the incumbents can directly compete.
In doing so, we eliminated opaque supply chains, rent seeking actors, and exploitative agents.

Core Addressable Market

US population 325.7m

— 140m US consumers between ages 13-35

EDM fans are ahead of leading interest genres in highest engagement and attendance of live events at 74% (cite nielsen)

— Followed by alt rock, then hip hop rap
— Which are the top 3 genres in our current user base

*Break even point = 0.024667% = 26,000 users

0.5% of our core addressable US market represents the conversion of  ⅙ the people who follow our initial artists on Soundcloud.

Matter Makes Streaming Profitable

Furthermore, based on the initial artist onboarding and the velocity of new artists signing on to the platform, 2.5% is accomplishable within the first year.

This limited outreach to artists and their participation not only reflects loyalty to the platform, but the scale of the market opportunity and our ability to capitalize.

Our initial artist
base

Initial artist sign up statistics

— 3m Soundcloud following
— 30m monthly streams
— 1.5m Twitter following
— 4.5m Instagram following

We are targeting the “stickiest” genres with the highest rates of streaming, hip-hop/rap and EDM.

Artist engagement

Artist base

— 60% US

— 35% european

— 5% other

Artist growth on closed Alpha

— 500 users in first 5 days

User engagement

— average time spent on platform has been ranging from 75-105 minutes

— average pages viewed per session = 29.3

only 183 artist links sent out so far

— 5 day k factor = 1.7

for each artist we onboard, an additional 1.7 are joining

Blockchain driven efficiency

Data Ownership

Transparency

Scalability

Reduced Cost
​Servers

Payment Processing
Options

Security

Global Reach

Internet 2.0

Forefront of technological revolution

Integration with new innovation

Congressional
Support

Our blockchain platform allows best in-class metrics of the following criteria:

Available non-core Growth Strategies

Matter’s platform analytics support high daily activity for its users (83 minutes per day). Because their cost of goods is agnostic to user activity, Matter is able to broaden product scope to make even more money.
 

Matter’s community-first approach enables the company to enter adjacent verticals. Driving platform revenue and increasing monetization opportunities for creators.  Further establishing a deeper wedge between us and our competitors.

The platform

Here’s the full functionality

Paul Meed:           CEO

Created and sold his cryptocurrency trading firm, then got over 5 million streams with his first releases as an independent artist

Ryan Klaus:             COO

Team building, organizational development, and sales experience. 1 successful exit

Josh Pan:       Creative Director

MBA graduate and active musician signed to a top electronic label (Skrillex-founded OWSLA). Can hear his music on EA’s Fifa 19, and is scoring a new Netflix series

Boris Adimov:       CTO

Years of immense experience building and shipping promotional websites, complex services, startups and mobile apps.

Bogdan Kovtun:
VP of Engineering

With over 20,000 career hours spent as a backend developer, he is practically a machine himself

Here’s who we are

Tigran Tumasov:
Product Manager

Extreme communication and problem solving skills combined with outside-the-box thinking to design the best possible product

We are raising
$4 million

$4 million brings
Matter to product market fit

— Full time engineering team

— Marketing

— Team development

— Office

— 2 strategic hires: VP of music

and Senior UI/UX developer

— Business and liability insurance

Appendix

Go to market strategy, artist engagement

How much we’ve spent to this point, burn rate, etc

Data, data, data, on everything relevant you can find, relating to specific slides, and from reputable sources.

Citations

1. Winberg, Sampo. “Constantly Evolving Music Business: Stay Independent vs. Sign to a Label: Artist’s Point of View,” n.d., 68.

2. “The Average Person Spends Less Than $15 Per Year on Streaming Music | Digital Trends.” Accessed February 2, 2019. https://www.digitaltrends.com/music/nielsen-streaming-music-spending-news/.

3. “Spotify Just Turned the First Net Profit in Its History (but It’s Not Particularly Happy about It).” Music Business Worldwide, November 1, 2018. https://www.musicbusinessworldwide.com/spotify-just-turned-the-first-net-profit-in-its-history-and-its-not-particularly-happy-about-it/.

4. “Here’s Exactly How Many Shares the Major Labels and Merlin Bought in Spotify - and What Those Stakes Are Worth Now.” Music Business Worldwide, May 14, 2018. https://www.musicbusinessworldwide.com/heres-exactly-how-many-shares-the-major-labels-and-merlin-bought-in-spotify-and-what-we-think-those-stakes-are-worth-now/.

5. “The SoundCloud You Loved Is Doomed | Pitchfork.” Accessed February 2, 2019. https://pitchfork.com/thepitch/the-soundcloud-you-loved-is-doomed/.

6. “Radio Is Dead In 10 Years. This Study Proves It.” Digital Music News (blog), August 31, 2017. https://www.digitalmusicnews.com/2017/08/31/radio-dead-musonomics-study/.

7. “Declining Audience, Rising Revenue For Pandora.” Insideradio.com. Accessed February 2, 2019. http://www.insideradio.com/free/declining-audience-rising-revenue-for-pandora/article_f0f129be-9556-11e8-b009-5fa5684f0ca0.html.

8. Kafka, Peter. “Spotify Has Guaranteed to Pay Big Music Labels Billions over the next Two Years.” Recode, June 15, 2017. https://www.recode.net/2017/6/15/15807382/spotify-revenue-2016-financials-guarantee-payment-universal-merlin.

The Breakdown

$43,000,000,000 of revenue was generated in 2018,
with over $29b going to non-content creators

Profit
Potential

As streaming consumption increases, incumbents are unable to absorb increasing licensing costs.

By removing margin dependency from user activity, Matter is able to double industry leader’s margins.  

If trends of increased digital music consumption continues, current industry leaders will be placed in a consequential situation.

Competitive
landscape

— Gain a following on Soundcloud

— Upload to Spotify to get paid royalties

— Determine splits with your producers on Stem

— Acquire distribution and digital rights on Distrokid

— Announce new releases on Twitter

— Sell merch on Shopify

— Sell beats on Tracktrain

— Sell used gear on Ebay

— Sell tickets through LiveNation

— Show behind the scenes on Instagram

— Receive tips on Patreon

Distribution solutions past publishing

The hub for your digital music career

Marketshare

Smart Contract Revenue Distribution

The
network
enables
revenue

Discovering
talent

Of today’s top 25 artists, 9 have been discovered on Soundcloud. In 2014-2016 Soundcloud was able to provide necessary engagement between artists to propel careers.

Where will the next Post Malone be found? The answer is Matter.

Non-organic customer acquisition

Social media: 33%

Advertising: 23%

Artist referral: 23%

Press: 21%

Marketing plan

Social media users also are more likely to follow
a musician than any other celebrity or public figure:

— 57% of social media users follow artists

— 50% of users follow actors or actresses

— 35% follow professional athletes

— 25% follow politicians

Music drives social media

ICO plan

Trailing 3 months

(Active UsersHype + Historic NAL) Market timing = Successful Sale

Average ICO Monthly Raise Over Past Year = $1.86 Billion per Month

Token Generation Event = $25m

October:
$720m

November: $530m

December: $690m

The “average” ICO has raised $6.9m
over the past 3 months

Additional Moats

SEC No Action Letter

Bipartisan Congressional support from:

Key legal authorizations:

Patent pending for dual token model

— Unprecedented for blockchain sector.
— Allows to legally ICO to US                        non-accredited investors  

— House Financial Service Committee

— Senate Finance Committee

— Blockchain Caucus

— Music Modernization

Partners and
Progress

Recording
Academy

Sonic Ark Publishing LLC

Matter’s platform analytics support high daily activity for its users (83 minutes per day). Because their cost of goods is agnostic to user activity, Matter is able to broaden product scope to make even more money.

2 year revenue forecast

Matter can generate a profit within 3 months because of low overhead cost to implement their model. Long term scalability will be achieved through domination of fragmented music commerce verticals, and adoption of their new payment paradigm.

6-month Launch Plan

1/15

Private Alpha

1/18

Artist Onboarding

Launch of streaming features

2/1

User onboarding

Launch of social features  Bring initial users into the Private Alpha. Enable them to invite 5 friends with referrals

4/1

Paid Subscription

Completion  of mUSD integration to be used in weekly smart contract distributions

4/1

Shop

Completion of digital marketplace and commerce stimulus plan

4/1

IOS + Launch

Completion of iOS media player . Launch of shop, iOS and platform monetization

Strong results with only $300k spent

4,180 hours of development

3 platform designs and iterations

1 re-brand

NAL draft submission

Initial Artists with over 31,000,000 monthly streams

Expected Future
Burn Rate

Here’s why we are defensible

Artists already onboarded support our pricing model

We are addressing a unaddressed market. Forcing incumbents to abandon current business  practices to compete on our terms

Pricing model

— Non fixated payouts

Paradox of high activity platforms is non-linearity of cost of goods vs. subscription revenue

— Reducing several layers of “middlemen”

— Aggregate several industry value props at lower price

Rounds of funding completed by direct competitors

Spotify

24

Pandora

10

Soundcloud

9

Matter is operationally profitable from streaming alone after capturing 0.026% of their core addressable US market. Matter will not need further rounds of funding in any foreseeable future.

How a song
is made today

How sustainable is

However, with the advent of the digital age, artists have been unable to monetize their work, leading to shocking statistics such as the amount of streams it takes for an artist to make the minimum wage. Additionally, artists typically only recieve distributions every 3-6 months.

Structure
of the
Industry

The present structure of the music industry was born of a time when the radio was king, the record store was queen, and the labels were small and independent.

Principal Organisational
Structures of the Music
Industry

How $1 Flows from Spotify
to Recording Artists

How did we get here? Music and the Digital Revolution

The music industry in the past
20 years has been subject to massive disruptions that have
yet to reconcile themselves
in the marketplace:

The rise of pirated downloads

Massive pricing pressure on the cost
of music

The Apple Music store

Reduced the need to buy whole albums

The rise of streaming as an alternative

All these trends of the digital age has largely left being a musician impossible. However, the second generation of the internet, blockchain, enables our solution

As artist revenue has shifted away from sales and royalties, and towards merchandise and ticketing, there has been

We realized that social media was how the majority of artists connected with their fans, and we put that as part of the platform.

And most of all, we take far less than the current streaming incumbents, while making a profit from the third month.