diff --git a/README.md b/README.md
index c2709c5..215c808 100644
--- a/README.md
+++ b/README.md
@@ -1,2 +1,143 @@
-# beatmatchr
-# beatmatchr
+# beatmatchr backend
+
+A lightweight FastAPI service that powers beatmatchr. This guide walks through
+the steps required to run the backend locally.
+
+## Prerequisites
+
+- Python 3.10 or newer installed and available on your `PATH`.
+- [`ffmpeg`](https://ffmpeg.org/) installed (macOS: `brew install ffmpeg`,
+  Ubuntu/Debian: `sudo apt install ffmpeg`).
+- Docker and Docker Compose (v2) for running Postgres and Redis.
+
+## 1. Create and activate a virtual environment
+
+```bash
+python3 -m venv .venv
+source .venv/bin/activate  # Windows: .venv\Scripts\activate
+```
+
+## 2. Install Python dependencies
+
+With the virtual environment active, install the requirements:
+
+```bash
+pip install --upgrade pip
+pip install -r requirements.txt
+```
+
+## 3. Start Postgres and Redis via Docker Compose
+
+A `docker-compose.yml` file is provided at the repository root. Launch the
+services in the background:
+
+```bash
+docker compose up -d
+```
+
+This spins up:
+
+- Postgres on port `5432` with database/user/password `beatmatchr`.
+- Redis on port `6379` for task queue usage.
+
+If you need to tear everything down (including volumes), run:
+
+```bash
+docker compose down -v
+```
+
+## 4. Configure environment variables
+
+Export environment variables that the backend expects. The defaults line up with
+`docker-compose.yml`, so you can simply create a `.env` file (or export them in
+your shell):
+
+```bash
+export POSTGRES_USER=beatmatchr
+export POSTGRES_PASSWORD=beatmatchr
+export POSTGRES_DB=beatmatchr
+export POSTGRES_HOST=localhost
+export POSTGRES_PORT=5432
+export REDIS_HOST=localhost
+export REDIS_PORT=6379
+export REDIS_DB=0
+export CELERY_BROKER_URL=redis://localhost:6379/0
+export CELERY_RESULT_BACKEND=redis://localhost:6379/0
+```
+
+Feel free to adjust these if you change the Docker Compose configuration.
+
+## 5. Run database migrations / initialize tables
+
+If you have Alembic migrations configured, apply them with:
+
+```bash
+alembic upgrade head
+```
+
+If migrations are not available yet, you can run your project-specific database
+bootstrap script (for example `python -m backend.db init_db`) to create tables
+manually. Ensure the `DATABASE_URL` environment variable is pointing at the
+Postgres instance from the Docker Compose stack.
+
+## 6. Start the FastAPI application
+
+Launch the app with `uvicorn` (hot reload optional):
+
+```bash
+uvicorn backend.main:app --reload
+```
+
+The API will be available at <http://localhost:8000/>.
+
+## 7. Start the Celery/RQ worker
+
+For Celery, point to the Celery app defined in your project (replace the module
+path if needed):
+
+```bash
+celery -A backend.worker.celery_app worker --loglevel=info
+```
+
+If you are using RQ instead of Celery, start a worker referencing the same Redis
+instance:
+
+```bash
+rq worker beatmatchr --url redis://localhost:6379/0
+```
+
+## 8. Example API usage
+
+Replace `PROJECT_ID` with the UUID returned from the *create project* call.
+
+### Create a project
+
+```bash
+curl -X POST "http://localhost:8000/projects" \
+  -H "Content-Type: application/json" \
+  -d '{"name": "Demo Project", "description": "My first beatmatch"}'
+```
+
+### Upload audio to a project
+
+```bash
+curl -X POST "http://localhost:8000/projects/PROJECT_ID/audio" \
+  -F "file=@/path/to/local/file.wav"
+```
+
+### Add a source clip by URL
+
+```bash
+curl -X POST "http://localhost:8000/projects/PROJECT_ID/sources" \
+  -H "Content-Type: application/json" \
+  -d '{"url": "https://example.com/audio.mp3", "start": 0, "end": 30}'
+```
+
+### Fetch lyrics for a track
+
+```bash
+curl "http://localhost:8000/projects/PROJECT_ID/lyrics"
+```
+
+With the services running and environment variables configured, you should be
+able to follow the steps above to interact with the beatmatchr backend locally.
diff --git a/backend/config.py b/backend/config.py
index b2773be..3f0d830 100644
--- a/backend/config.py
+++ b/backend/config.py
@@ -1,7 +1,64 @@
+"""Application configuration utilities."""
 from __future__ import annotations
 
 import os
 from functools import lru_cache
+from typing import Any, Dict
+
+
+class Settings:
+    """Configuration values loaded from environment variables.
+
+    The defaults are tuned for local development and match the docker-compose
+    configuration provided in this repository. Each value can be overridden by
+    setting the corresponding environment variable before starting the
+    application.
+    """
+
+    def __init__(self) -> None:
+        self.postgres_user: str = os.getenv("POSTGRES_USER", "beatmatchr")
+        self.postgres_password: str = os.getenv("POSTGRES_PASSWORD", "beatmatchr")
+        self.postgres_db: str = os.getenv("POSTGRES_DB", "beatmatchr")
+        self.postgres_host: str = os.getenv("POSTGRES_HOST", "localhost")
+        self.postgres_port: int = int(os.getenv("POSTGRES_PORT", "5432"))
+
+        self.redis_host: str = os.getenv("REDIS_HOST", "localhost")
+        self.redis_port: int = int(os.getenv("REDIS_PORT", "6379"))
+        self.redis_db: int = int(os.getenv("REDIS_DB", "0"))
+
+        self.database_url: str = os.getenv(
+            "DATABASE_URL",
+            (
+                "postgresql+asyncpg://"
+                f"{self.postgres_user}:{self.postgres_password}"
+                f"@{self.postgres_host}:{self.postgres_port}/{self.postgres_db}"
+            ),
+        )
+
+        redis_base_url = f"redis://{self.redis_host}:{self.redis_port}/{self.redis_db}"
+        self.redis_url: str = os.getenv("REDIS_URL", redis_base_url)
+        self.celery_broker_url: str = os.getenv("CELERY_BROKER_URL", self.redis_url)
+        self.celery_result_backend: str = os.getenv(
+            "CELERY_RESULT_BACKEND", self.redis_url
+        )
+
+    def dict(self) -> Dict[str, Any]:
+        """Return the settings as a plain dictionary (useful for debugging)."""
+
+        return {
+            "postgres_user": self.postgres_user,
+            "postgres_password": self.postgres_password,
+            "postgres_db": self.postgres_db,
+            "postgres_host": self.postgres_host,
+            "postgres_port": self.postgres_port,
+            "database_url": self.database_url,
+            "redis_host": self.redis_host,
+            "redis_port": self.redis_port,
+            "redis_db": self.redis_db,
+            "redis_url": self.redis_url,
+            "celery_broker_url": self.celery_broker_url,
+            "celery_result_backend": self.celery_result_backend,
+        }
 from pathlib import Path
 from typing import Optional
 
@@ -47,6 +104,9 @@ class Settings(BaseSettings):
 
 @lru_cache()
 def get_settings() -> Settings:
+    """Return a cached instance of :class:`Settings`."""
+
+    return Settings()
     """Return cached application settings instance."""
 
     settings = Settings()
diff --git a/docker-compose.yml b/docker-compose.yml
new file mode 100644
index 0000000..a86e4dd
--- /dev/null
+++ b/docker-compose.yml
@@ -0,0 +1,36 @@
+version: "3.9"
+
+services:
+  postgres:
+    image: postgres:15
+    restart: unless-stopped
+    environment:
+      POSTGRES_USER: beatmatchr
+      POSTGRES_PASSWORD: beatmatchr
+      POSTGRES_DB: beatmatchr
+    ports:
+      - "5432:5432"
+    volumes:
+      - postgres-data:/var/lib/postgresql/data
+    healthcheck:
+      test: ["CMD-SHELL", "pg_isready -U beatmatchr"]
+      interval: 10s
+      timeout: 5s
+      retries: 5
+
+  redis:
+    image: redis:7
+    restart: unless-stopped
+    ports:
+      - "6379:6379"
+    volumes:
+      - redis-data:/data
+    healthcheck:
+      test: ["CMD", "redis-cli", "ping"]
+      interval: 10s
+      timeout: 5s
+      retries: 5
+
+volumes:
+  postgres-data:
+  redis-data:
diff --git a/requirements.txt b/requirements.txt
new file mode 100644
index 0000000..f347096
--- /dev/null
+++ b/requirements.txt
@@ -0,0 +1,12 @@
+fastapi>=0.110
+uvicorn[standard]>=0.24
+sqlalchemy>=2.0
+asyncpg>=0.29
+databases[postgresql]>=0.7
+alembic>=1.12
+aiofiles>=23.2
+pydantic>=2.0
+celery>=5.3
+redis>=5.0
+rq>=1.15
+python-dotenv>=1.0