Check out all the on-demand sessions from the Intelligent Security Summit here.

Encore has raised $9 million in funding to enable a middle class of music artists. It lets musicians create live augmented reality shows where fans can pay as little as 10 cents per “clap.”

Cofounded by Kid Cudi, the idea behind Encore is to allow artists to create mobile AR shows and get paid directly through micropayments, said CEO Jonathan Gray in an interview with VentureBeat.

“We going to borrow from the different proven and validated business models and interaction models and community models that have happened in and around gaming, and try to bring that into the music industry,” said Gray. “That’s what we’re here to do.”

The Los Angeles-based company is launching the Encore Studio App today. Battery Ventures led the round, with other investors including 468 Capital, Parade Ventures, Nomad Ventures, Moving Capital, Kayak Ventures, and Gaingels.

Encore gives music artists the tools and technology to tell their story, release new music, and host conversations and interactive experiences with their fans. Using Encore, artists create and perform live in custom AR environments from their mobile device. Fans participate via gamified microtransactions in the form of a ten-cent “clap,” which can be used to watch live shows, chat with an artist, and interact.

The idea is to create short shows of maybe five minutes to 15 minutes that people can pay 10 cents for. They can pay more than that if they want, the same way that fans can “tip” their favorite livestreamers over and over a again. But the claps don’t show up on the screen and interrupt the performances. With a crowd of 500, a music artist can make $5,000 from a 15-minute performance.

Encore lets fans pay 10 cents per “clap” to applaud artists.

“Something overlooked by a lot of the other creative platforms is music is about discovery,” Gray said. “If, if the price of something doesn’t allow for a new user to experiment, or try it, then that will have a really hard time in music. And so what 10 cents is really about is it’s trying to balance two things, right? One is accessibility and discoverability, wanting any kid to be able to actually attend live music shows because today they can. But on the other side, it’s about making sure that properly and fairly rewarding artists for their time and creativity. And I think for us, 10 cents has really turned out to the this kind of happy medium. If all I do is clap one time into a show. It doesn’t seem like I’ve really spent much money. But 10 cents per user is like 100 times more per user than a musician would see on any other platform.”

Gray said that the microtransactions from gaming were an inspiration that could help the music industry, which in its entirety is valued at around $30 billion — just a fraction of what Microsoft is paying ($68.7 billion) for one company, Activision Blizzard, in a big gaming acquisition.

While in private beta, hundreds of artists including SSGKobe, KYLE, Too $hort, and The Cool Kids have created and performed Encore shows to tens of thousands of fans, who have collectively clapped almost a million times. Those who are superfans can spend a lot more than 10 cents if they want.

“The superfan wants to get their voice heard, they want their text bigger, they want to get this email from the artist,” Gray said. “Just like in gaming, it’s important to capture the whales (those who spend a lot).”

Those fans can get things like backstage passes, where they can come on video and say things to the performers.

Kid Cudi serves as chief creative officer. Hollywood producer, screenwriter and director Ian Edelman is president. And Gray is a software engineer and technology entrepreneur who cofounded Encore in 2020. Before that, Gray was CEO of Cask Data, which Google acquired in 2018.

Encore has raised $9 million to create a middle class of musicians.

Gray said he was an outsider to the music industry, but he enjoyed coming at problems from a deep technical background. He was mulling around with ideas but dove into the startup when COVID hit, as musicians needed to find ways to make money without live in-person gigs.

Back in college, about 15 of his fraternity brothers all worked at Zynga, and his vice president of engineering used to work at Zynga.

“There is a lot of influence from gaming,” Gray said. “The thing that gets me out of bed every day and makes me feel like we’re running after a massive opportunity is looking at how big the video game industry has become. It has gotten big because of innovation, and music has had very little innovation.”

he noted how you can still buy a $60 game in a store, or pay a lot of money for a console, but you can also download free games and play them all day or every day for free. If you want to spend a lot of money in a free-to-play game, you can do so. Those models help accommodate a lot of different types of gamers. By contrast, you can subscribe to Spotify for $9.99 a month and get access to just about all the music in the world.

Worse, the payouts for artists are very low. To make much money at it, you have to be a kind of superstar, and that’s very hard to achieve.

“The vision of the company is really how we are going to create a middle class of music,” he said.

To do that, Encore will follow the pattern of streamers and platforms like Twitch, which enables streamers to benefit from specator contributions. More musicians are starting to adopt platforms like Discord, Gray said.

“These things are really being brought over from the gaming industry into the music industry. And so we’re really begging, borrowing, and stealing as much as we can,” Gray said.

Some things are different. Many musicians aren’t successful on Twitch.

“We wanted to take a lot of these concepts around gamification, in-app purchases microtransactions, community direct engagement, and bring that to the music industry,” Gray said. “The big tech play here is giving artists the tools to be able to create visual content, to be able to host live performances, to be able to host different types of experiences with their fans, with a focus on fun.”

The app has been in private beta until now, and Gray said the team has validated the core premise of the business, which is that fans will come if the artists show up. Artists have been making thousands of dollars a week from weekly 15-minute shows, Gray said.

To use the Encore Studio App and perform live in AR, visit the App Store on your iPhone or iPad and download Encore Studio: Live Music AR. To watch live AR performances, visit the App Store or Play Store and download Encore: Interactive Live Music.

I’ve seen a demo and it looks very easy for a musician and a friend to create a show with visual effects that people can view on a smartphone. Musicians can upload their own assets or access a library from Encore.

“You can do all kinds of effects” as overlays on the real world, Gray said. The app is built with Unity.

The team has about 30 people and the company has raised $11 million to date.

VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative enterprise technology and transact. Discover our Briefings.