It’s no secret that, for most artists, the music industry just doesn’t pay. In 2020, each time a listener streamed a song on Spotify, an artist received a bit more than three one-thousandths of a penny on average, according to a United Nations report.
That’s what David Greenstein, cofounder and CEO of Sound, is looking to change, and the biggest crypto investor in town is backing him. On Wednesday, Sound announced that it’s raised $20 million in a Series A round led by a16z Crypto, a branch of Andreessen Horowitz. Other participants included the rapper Snoop Dogg, songwriter Ryan Tedder, as well as Palm Tree Crew, A Capital, Sound Ventures, Collab + Currency, and Scalar Capital.
The injection of capital follows a seed round of $5 million in December 2021, also led by a16z. Greenstein declined to provide his firm’s latest implied valuation, a rare raise of capital in an increasingly tight fundraising market for crypto firms.
“Music is the category of media with the very worst power imbalances, heavily favoring intermediaries and screwing over artists,” Ali Yahya, a general partner at a16z Crypto, said in a statement. “Sound is music without the middleman.”
For Greenstein, music has played a “critical role” in his life since he was a child, despite the difficulty of hearing with a left ear that needed surgical reconstruction when he was young. “Growing up, people always tell you what you can and cannot do,” he told Fortune.
When he was 13, he landed an internship at Atlantic Records after an executive from the company spoke at his school, and Greenstein’s college application essay focused on structural issues within the music industry.
After college at the University of Pennsylvania and time at Pandora, the online music streaming company, he decided to set out on his own, and, with cofounders Vignesh Hirudayakanth and Matt Masurka, launched Sound in December 2021. (Masurka has now transitioned to an advisor role.)
Their platform is a cross between Spotify and iTunes. Artists pay a small fee to upload their songs onto the website. All songs are available for a user to stream; however, along with the free song to stream, an artist creates a limited quantity of non-fungible tokens, or NFTs—Greenstein says the average is somewhere between 25 and 50—that users can mint. Artists determine both the quantity and price, not Sound, and the firm takes a flat fee from users every time they mint an NFT.
“Sound is digital vinyl,” Greenstein said, comparing NFTs purchased on his platform to the throwback records fans now increasingly buy from their favorite artists. He added later: “We need new ways to experiment with how we value and monetize music.”
So far, Sound has generated $5.5 million in revenue for those who have uploaded their music onto the website as NFTs. Greenstein says that his team of now 16 employees has officially opened up the platform, which was currently invite only, to all interested musicians as of Wednesday.
“I’m looking for the next Drake, the next Billie Eilish,” Greenstein told Fortune. “And my guess is that they’re already on Sound, or they will be on Sound.”
