Tunezy, a fan-driven social record label, believes it can revolutionize the $20 billion independent music industry. The idea behind the Richmond Hill-based start-up is to leverage the tools of social media and gamification to empower fans to help their favourite independent musicians succeed. When fans engage with music on the site, by listening to a song, sharing it on Twitter, or leaving a comment, they earn notes, a virtual currency that can be used to tip artists they like. Once they've earned enough notes, artists can spend them in Tunezy's marketplace, which contains services associated with a traditional record label - including mixing, studio time, licensing and promotion.

In March, the Tunezy team pitched its concept and won first place out of over 80 teams at NBTC in Toronto, and earlier this month Tunezy announced it had sold a 20% stake in the company to Intertainment Media. Next up, Tunezy is poised to launch in private beta at the end of May, and will unveil itself to the public later this summer.

I recently sat down with 24 year old co-founder and CEO Derrick Fung to learn more about the inspiration for Tunezy, and why he thinks it will strike a chord with music lovers.

Where did the idea for Tunezy come from?

My co-founder, Brandon Chu, and I looked at the major trends in the music space. First and foremost, people don't want to buy music anymore. Second, the Internet is allowing independent content creators to bypass traditional gatekeepers (like publishing companies and record labels) to go directly to the consumer. Third, there are all these Internet trends: social media, crowdsourcing, and gamification. We combined these trends with our passion for music, and Tunezy was born.

How long has Tunezy been in development?

We officially launched the company in January but the idea has been in the works for almost a year now. Brandon left his job at Kraft, where he was an associate finance manager, the first business day after we won the NBTC competition. I left my job in December 2011. We're now working on the company full time and have a growing, top-notch team.

How did your background prepare you to enter the music biz?

I went to the University of Toronto to study business, spent some time at Microsoft working in marketing and, later, worked in investment banking. As the CEO of Tunezy, understanding finance is a huge asset. I'm also a big music lover. I've played music since I was four. I was classically trained in Royal Conservatory and I play guitar as well. When I was in high school I had a website called Quality Sheet Music, which is where I had my first foray into technology.

How will Tunezy help fans discover new artists?

Right now if you go to YouTube and want to discover new musicians, it's very difficult; there is a sea of videos and you don't know where to start. We think we've found a solution to that problem. Users sign up for Tunezy through their Facebook account, and so we will have some data about their preferences to begin with. Then, we'll ask users to provide input about what they want and like. We built these filters based on the way we think people naturally look for music. By leveraging this data, supplemented by data from their activity on the site, we will be able to recommend independent musicians in line with their preferences.

How will it look?

Without revealing too much, because we want to make it a surprise when we launch, I can say that we're making the experience very visual. We think that design is becoming more and more of a competitive advantage for start-ups, and so we focused on design when creating our site. Once users make their selections, which will be done in a visual way, we populate the screen with stuff we think they'll like and, like Pinterest, there will be an infinite scroll. Every musician on the site will have a "V Card," a visual way of identifying them.

Is there a way for people to use the site without giving their data away?

Right now, in terms of harvesting data, it's just from Facebook, and a lot of start-ups use Facebook data as the main way to register. We're considering opening it up to allow users to participate by just giving us their email address. But to have the best experience, you're going to have to connect through Facebook.

Will all independent artists be eligible to participate on the Tunezy site?

Right now, any independent artist with a music video on YouTube can be part of Tunezy. It could be a homemade video of someone playing in their room, or it could be a professional recording. As long as they're not signed to a major record label they can use our site.

How does Tunezy make money?

We hope to make money in three ways. First, fans will be able to supplement the notes they earn by purchasing notes on the site. They may use these notes to tip artists, but we also hope to open up the marketplace to fans so they can spend their notes on cool experiences, like concert tickets or Skype chats with their favourite band. Second, we'll make money through partnerships with companies in the marketplace. Companies will pay to be featured on our site. Finally, if musicians purchase services of a company in the marketplace and then end up buying more services from that company, we'll make money through affiliate sales.

Where do you see Tunezy in 5 years?

Five years from now, I want musicians to think: there are two paths I can go, I can go the old school traditional way, try to be that 1% of musicians who will sign with a record label, and have them take all my money. Or, I'll stay independent, keep my money, and use Tunezy as a platform to help me springboard my career forward. I think that this is the future of the recorded music industry.

Writing by Nadine Blum