A musician’s introduction to the metaverse, NFTs and Web 3.0.
How has the rapidly evolving digital world, more specifically the Web 3.0 metaverse, impacted the music industry? What can we expect the future to hold? We dig into some of these questions in our first blog post and uncover the good, the bad and the ugly.
How did we get here?
To really understand where we are, we have to go back a few decades. The dot-com boom of the late 1990s occurred as investors, consumers, and tech companies saw the expansion of the internet. The Web 1.0 internet (as it’s now retrospectively called) with its introduction of email and communication tools was the first time that networks of people could be connected around the world, for business and for pleasure.
The era of Web 2.0 emerged in the mid-2000s, with the arrival of increasingly faster broadband speeds and social media platforms like SixDegrees.com, Blogger, Friendster, Myspace, Facebook, and Twitter pushing communication even further and allowing for vast communities to engage with each other. Unlike its web 1.0 era sharing, Web 2.0 created a space where sharing images, files, and videos, alongside live-streaming capabilities became standard digital practices for many people in developed nations.
The early Web 2.0 era also brought about a dark period of significant digital piracy across the globe. The boom of YouTube, torrenting and file-sharing sites during this period changed the music consumption landscape as we knew it, by giving unprecedented, largely unregulated access to digital music for free. Due to these drastic technological changes, the music industry’s total sales declined by more than 50% from 1998 to 2007.
In 2010, Joshua Friedlander, the former vice president of research at the RIAA (Recording Industry Association of America), stated that “the industry [had] some growing pains in terms of monetising these changes.” The gap between consumer demand for music and the industry’s ability to provide a sustainable, fair way for consumers to access it had widened to near breaking point. It wasn’t until the music streaming market came about, spearheaded by the likes of Spotify, that the global recorded/digital music industry was able to stand on firm ground again, with streaming services providing a still imperfect, but more sustainable way of providing consumers access to large libraries of music to listen to, where DSPs (Digital Service Providers) like Spotify would charge subscriptions and/or have an ad-driven system on board, which would feed back into the industry through licensing and royalties.
The music industry has made substantial progress since then and it has been exceedingly lucrative in recent years, growing by 7.4% in 2021. But now, although the music industry is in a phase of mostly stable growth, there is a new ‘elephant in the room’ that has been taking up more space year on year. What will be the next transformative technological development and how do we prepare for it? The Web 3.0 world, including NFTs and the metaverse (a network of 3D virtual worlds focused on social connection), may be the thing to look out for.
What are NFTs?
Overshadowed only by their Web 3.0 sibling NFTs, ‘metaverse’ is a hot word in the technology world in 2022. An NFT (as you may already know) is a unit of data stored digitally on something called a ‘blockchain’, which can be sold and traded. They often take the form of photos, videos and audio.
NFTs are not a futuristic concept, but a tangible reality that is part of the present day. Artists have already started to sell art in the form of NFTs, which in the case of some artists has allowed them to shift the power dynamics of the music industry once again in their favour. For some, NFTs have been a positive source of revenue streams for some established and upcoming artists.
One intersection between NFTs and the metaverse is Katy Perry’s collaboration with Theta Labs, a blockchain video streaming platform, in which she is converting her concert performance into ‘digital collectables’. Many industry professionals suspect that these tokens will be important aspects of metaverse-related concerts and content in the future.
NFTs have opened the eyes of many to a digital world in which digital craftsmanship and currency are heavily valued. Some artists have found success in the NFT market, but will they embrace the metaverse the same way? It would seem so, as the intersection between the music industry and the metaverse has gradually revealed itself in the past few years.
Are there any music industry successes with Web 3.0 already?
• Grimes, a well-known Canadian artist with a reputation for being ‘ahead of the curve’, has embraced NFTs as well. At one point, Grimes had accumulated a grand total of $6 million USD in NFT-related content, whether that be new music, old demo tracks, or visuals.
• Kings of Leon’s album, “When You See Yourself,” was one of the first major albums to be released as a collection of NFTs. The band generated a total of $2 million from these sales through their collaboration with Yellow Heart, a prominent blockchain technology company. Album sales started on March 5th and ended on March 19th, giving fans only two weeks to buy the album (utilizing an exclusivity and scarcity factor to drive album sales).
• Ha Jiang, a virtual artist or AI-generated performer, recently signed a record deal in China. In other words, someone who doesn’t exist was signed to a major record label (that is bound to hurt an unsigned musician’s feelings). To many who are well-versed in the Asian music market, this does not come as a surprise. ‘Virtual idols’ have gained large followings in China and other parts of Asia. Ha Jiang herself has 100,000 followers in China, making it a no-brainer for Whet Records – Warner Music Group‘s pan-Asian dance label in China – to sign the virtual artist.
• Timbaland, the producer and record executive, recently announced a partnership with Bored Ape Yacht Club, a popular NFT project, to launch an entertainment company within the metaverse. Their hope is to turn the 10,000 NFT characters into metaverse music artists with distinctive music styles. When describing this new venture, Timbaland described it as “a new entertainment platform in the metaverse that puts creative control and long-term ownership back in the hands of artists, a concept that is incredibly important to us.”
• The Bored Ape Yacht Club has had multiple other success stories. KINGSHIP, a new virtual group launched by Universal under the subsidiary 10.22PM, is made up of a Mutant Ape and three Bored Ape characters, including rare Golden Fur and Bluebeam Apes. The founder of 10.22PM has expressed that they have 100% monetisation rights over these characters and are looking to “kick off a new generation of artist, fan and community engagement” with these virtual artists.
What concerns around Web 3.0 does the industry have?
In early 2022, a new NFT platform ‘HitPiece’ caused a stir when it was revealed they had been selling a number of tracks as NFTs, without permission, and this isn’t the only time this kind of usage piracy has happened within Web 3.0 technology.
Another increasing concern surrounding NFTs is that many of their platform’s ‘proof’ systems require huge amounts of energy to operate, with the blockchain system itself being ‘inefficient on purpose’. For more on this particular angle, we recommend reading this great article from The Verge.
The sudden rise of NFT technology, environmental concerns, the potential for fraud/piracy and the knowledge gaps from consumers to music businesses to technology companies means the start of the Web 3.0 era isn’t without its issues.
Why should we care about Web 3.0?
The metaverse is expanding, and with it are ways for artists/labels to capture new audiences and gentrify their revenue streams. The examples listed are some of the first applicable business moves Web 3.0 has seen. It will be intriguing to see how the music industry continues to adapt to and take advantage of, these new technologies.
The music industry has hopefully learned its lesson from its trouble in the late 1990s and 2000s, it’s clear that the industry must adapt to new technologies and practices to stay afloat. As a result, artists are embracing the future, investing in NFT’s and metaverse live performances, knowing that it may lead to unforeseen opportunities. Labels and music executives are doing more than buying trendy digital monkeys, they are reshaping their image to meet a new age of technology. Time will only tell how this story plays out, but it’s clear that the music industry is not afraid to take the reins on its own destiny this time around.