Will Web3 Music Be On the Metaverse Guest List?
Prince's Final Payday. Bowie's Exclusive Remixes. Who Evaluated the Valuations?
Clubhouse is still a thing. Despite the waning media spotlight, the OG social audio app still drew over 2,000 listeners to a session about Web3 music last night where the conversation, hosted by Culture Club, turned to the acquisition of Activision by Microsoft and what it might mean for musicians.
Gaming has, for some time now, been a major driver of music consumption. And much of the speculation around Web3 music has included some sort of [new word alert!] metaversical vision. After all, the metaverse will need chill vibes and phat beats for anyone to want to spend most of their lives in there. The question is, does the music industry need Web3 more than the Metaverse? Are the two interchangeable or exclusive?
Much of the confusion comes down to terminology. The terms Web3 and the metaverse have both been kicking around for a few years but became mainstream nomenclature in 2021. So it’s no surprise they have become conflated.
To be overly reductive, the difference is that the metaverse is a collection of products and platforms that create a lived-in digital experience that augments or replaces our moment-to-moment IRL experiences. Web3 is a term for protocols that allow for decentralized ledgers that store data currently kept on the centralized servers that run Web 2.0. The data on those servers can currently only be accessed by the big platforms and distributed to users as they see fit. The ultimate promise of Web3 is that all that data can be democratically accessed, with ownership more evenly distributed, allowing non-corporate structured entities — individuals, groups, AI bots — to create new online experiences.
If all this still sounds vague, it’s because the potential for both Web3 and the metaverse is vague. Like looking at a 1980s grey and black Macintosh monitor and expecting to stream 4K movies. But we somehow got there thanks to a few visionaries and a whole lot of failed innovations. And the rush into both Web3 and metaverse is an indication that some very smart (and rich) people see the next thing, or think they do.
Already, there have been some very promising wins on both playing fields. In the metaverse, over 200,000,000 people played proto-metaverse game Roblox in the past 30 days. To show why this matters to the music industry, Lil Nas X performed a virtual Roblox concert in December 2020 where he sold “a healthy 7 figures” of virtual merch for very real dollars. Then in September of this year, Roblox settled a $200M lawsuit filed by the National Music Publisher’s Association over unlicensed music played by users in the game. This sent a strong signal to the music biz that platforms like Roblox and other metaverse products could soon join the list of lucrative licensing deals like Peleton, Twitch and TikTok that helped send major label revenues through the roof in 2021.
Web3 music revenues also keep growing, although the decentralized nature of the system makes it harder to track. The database kept by Water & Music shows nearly $100M in music NFT sales, and that doesn’t include dollars spent on music-related DAOs, music-derived PFPs and other crowdfunded tools and projects. Less than an hour ago, Web3 startup Royal sold out its first music royalty NFT sale featuring two songs by hip-hop legend Nas that brought in $274,980 in under an hour — potentially paving a whole new avenue for currency to flow from fan-to-artist on the blockchain.
But let’s get back to the intersection of Web3 music and the metaverse. About an hour into last night’s Clubhouse talk, we had an exchange with longtime Snoop Dogg affiliate and Web3 maximalist Nick Adler on the topic of how the major gaming companies have treated music IP in the past. To paraphrase Nick (he said we can quote him, but you can listen to the full exchange at the 57 min mark), the deals offered to Snoop by gaming companies in the past have been unsatisfactory, especially in light of what is now possible with Web3. At the same time, he conceded that the immersive experiences that enrapture fans in today’s gaming ecosystem can only be accomplished with the massive talent and resources of publishers like Activision.
It’s clear that Microsoft’s decision to acquire Activision for $68.7B is part of a strategy to apply the latter’s gaming expertise to the former’s ambition to build an MS metaverse. That kingdom will certainly be built on Web 2.0 tech for the foreseeable future. But there are plenty of places where Web3 can shake hands with the metaverse, particularly when it comes to music. One can hope for a world where holding a music NFT in your wallet gives the owner license to play that song at their virtual house party, the same way one might play vinyl when having friends over.
Portability is another buzzword driving the Web3 discussion, which for music could mean buying a Lil Nas X skin in Roblox, then wearing it in Fortnite. Like wearing your Goldenvoice Just Like Heaven festival t-shirt to Live Nation’s When We Were Young Festival.
Whether or not any of this will be possible is still going to depend on the big guys choosing an open platform vs. a walled garden. The internet tends to cycle between the two states. Creators, developers and fans will all be able to influence the future of online activity in a small way. But it will involve dancing with giants who have been known to step on the small guys, intentionally or not. Good thing music has the moves to get down with the tech behemoths.
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TAKEAWAYS
Salient statements from this week’s music news.
1. Prince’s Estate Pegged At $156.4 Million In Final Valuation
A case study in why artists are selling their catalogs and what can be lost when they don’t have their affairs in order.
Takeaway: Lawyers and consultants have been paid tens of millions of dollars to administer his estate and come up with a plan for its distribution. Two of Prince’s six sibling heirs, Alfred Jackson and John R. Nelson, have since died. Two others are in their 80s.
2. Catalog Appraiser Massarsky Consulting Sells to Citrin Cooperman As Music IP Sales Rush Continues
Everyone needs someone’s blessing. In the case of sky-high music valuations, that someone has been Massarsky.
Takeaway: Massarsky Consulting in 2021 valued north of 300 catalogs with a cumulative worth of over $6.5 billion.
3. Peloton’s New David Bowie Workouts Include Exclusive Remixes
You’ll have to exercise to hear the Bowie remixes Honey Dijon, St. Vincent and Tokimonsta.
Takeaway: This isn’t the first time Peloton has commissioned original remixes from a late artist’s archives: at the end of 2020 it worked with Sony Music on a trio of Elvis Presley reworkings. Those were exclusive to Peloton for a month before the label could release them elsewhere, but the company hasn’t said how long the exclusivity window is for the Bowie remixes.
