Currents: More legacy brands cross the Web2->Web3 bridge

This article is a web version of our biweekly, member-exclusive digest dedicated to our editorial and database updates. We break down and connect the dots among announcements of funding rounds, acquisitions, NFT drops, and other highlights in the music/tech ecosystem that we track as part of updating our suite of databases.

The name “Currents” is in line with the eponymous, read-only channel we launched in our private Discord server last month — in which our research team curates links to news announcements that shed light on the latest music/tech trends, often tying news to ongoing community discussions in the server. If you’re not already in our Discord server, please click here to authorize the Memberful Discord bot, which should give you access.

CHANGE LOG SUMMARY

Music/tech startup investment dashboard: We added $20M in new investments, including funding rounds for community-driven NFT startups Medallion ($9M) and Highlight ($11M). We also logged another acquisition of Napster — this time by Algorand and Hivemind for an undisclosed amount, after MelodyVR’s acquisition of the company two years ago for $70M.

Music NFT sales dashboard: Since our report on music NFT sales in 2021 came out two weeks ago, we have added hundreds of NFT sales to our database — thanks to community contributors who joined our weekly NFT backfill and discussion parties, as well as direct data feeds from music NFT platforms:

• 385 previously missing sales for artists who have benefited from NFT packs sales on the platform RCRDSHP. (These additions totaled more than $1M in music NFT sales attributable to our 2021 sales tracking, we’ll be adding 2022 sales soon!)
• 135 drops from 2022 on the platform Nina.
• 34 new sales that occurred on the platform Sound since our last update.
• 40 drops from artists who have had sales on other platforms, including but not limited to Madonna, Cristina Spinei, Xcelencia, The Chainsmokers, BlackDave, Nobide, Tritonal, Lupe Fiasco, and Jonathan Mann.

TRENDS WE’RE SEEING

Across these changes, a major meta theme we’re continuing to see involves archetypal, legacy Web2 brands trying to cross the bridge into Web3, especially as a branding, marketing, or community-engagement exercise.

Big tech embraces(?) Web3

We’ve seen several unmistakably Web2companiesexploring Web3 in various forms. These companies— i.e., Google, Meta (f.k.a. Facebook), Spotify, and others that were instrumental in defining the gatekeeping aspect of the last of the internet — have recently begun hosting NFTs, building internal Web3 teams, and partnering up with metaverse-related companies:

• Earlier this month, Meta’s Instagram announced it is enabling the ability to display NFTs on some creators’ profiles, posts, and stories. There’s not much info on Instagram’s broader plan around NFTs other than the detail that Ethereum and Polygon will be the first blockchains supported, with Flow and Solana “coming soon.” Head of Instagram Adam Mosseri also directly addressed the contradiction of a dominating centralized company like Meta adopting Web3 tech like NFTs, claiming they’re starting small to “learn from the community.”
• Spotify is also moving forward into new territories: Having announced a metaverse partnership with gaming platform Roblox, the Swedish company is testing a feature that allows select artists to promote their NFTs on their profile page. Unlike Instagram, however, Spotify will enable artists to link off to their own NFT sales on an external marketplace. Spotify says they won’t take any fees “as part of this test” and that it’s experimenting in response to requests from industry partners. (It’s worth noting our community spotted early on that Spotify was experimenting with releasing NFTs for superfans as part of its Fans First initiative, in partnership with the newly-funded Web3 startup Highlight.)
• Although not music-related, Google Cloud – Alphabet’s cloud computing services platform — has also launched a “Web3 team.” Google Cloud VP, GM and Head of Product Amit Zavery says the search giant wants to make Google Cloud the “first choice for developers working in this emerging field.”

There is a sense of irony and contradiction in these Web3 tests and investments from existing tech giants, because so much of their respective music businesses relies on partnerships with the very incumbents that Web3 could disrupt. For instance, according to our 2021 Music NFT Sales report, 64% of sales came from indie artists; in contrast, it has been found that between 70–87% of music listened to on Spotify comes from one of the three major labels. Similarly, when our community tried out the Roblox “Spotify Island” as part of our Season 2 metaverse meetup series, we found no inherent, direct integration with music other than some collectible music notes that played into the game, and certainly no intentional focus on discovering or connecting fans to artists in a way that is possible with NFTs.

With Spotify’s shares down over 50% from the beginning of the year (a steeper dip compared to its big-tech peers, even with the market slump), we can’t help but wonder how these activities factor into their strategy for turnaround. And for big-tech companies at large: Can they truly uphold Web3-native values of decentralized ownership and networks, or are they simply paying lip service to the new tech while there is still hype around the ideas?

Mid-2000s music brands reborn in Web3 clothes

As mentioned in our recent Discord Digest (May 14), numerous music and audio brands that came to prominence in the mid-00s have been returning to the radar, often as Web3 entities:

• Hivemind Capital and Algorand announced their acquisition of Napster — one of the most famous names in music piracy and one of the catalysts in transforming the modern music industry — for an undisclosed fee. According to MusicAlly, they intend to “bring the iconic music brand to Web3.”
• Earlier this year, peer-to-peer download platform Limewire, which in 2011 was famously sued by the RIAA for $72 trillion in damages, returned as an “artist-first” NFT platform. Shortly after, they raised $10M in a private token sale, including investments from Deadmau5’s 720Mau5 venture fund and DAO Jones, a group of Web3-first investors. This week, Limewire also announced a new partnership with UMG “for content licensing on a global scale.” UMG says they’ve partnered with Limewire to provide licenses that allow the platform to partner with their artists. It’s ironic that UMG was part of the unprecedented 2011 lawsuit against the OG Limewire, and is now partnering directly with the same brand name.
• Earlier this week, 2000s-era music player Winamp announced it’s selling its famous skins as NFTs to raise money for the Winamp Foundation. All funds raised will be redistributed to charity projects supporting music and musicians.

It’s notable seeing these names pivot to Web3. Some of them were at the forefront of music piracy — a movement that, like Web3, also defined a rebellion against the gatekeeping establishments and dominant monetization models of the time. Parallel to the big-tech transition into Web3, whether these acquisitions and investments are just piggybacking much-loved millennial brands for PR purposes or if they genuinely want to evoke the rhetoric of a pre-Web2 age remains to be seen.

More NFTs from legacy artists and brands

While artists with household names have been releasing NFTs throughout the last year-and-a-half (Snoop Dogg, Blondie, and Dolly Parton have all dropped collections), we’ve seen an influx of legacy brands and artists get in on the action in the last few weeks:

• Madonna and visual artist Beeple teamed up for a new series of three NSFW NFTs that dropped on SuperRare on May 11, earning $630K from the primary auctions. All proceeds raised will go to three charities, The Voices of Children Foundation, The City of Joy, and Black Mama’s Bail Out. Our 2021 Music NFT sales analysis noted that philanthropy is one of the most common utilities packaged with NFTs.
• Toto founder and guitarist Steve Lukather launched a “VIP fan club” powered by NFTs. The first drop features 15 NFT avatars modeled around crucial moments in Lukather’s career, with 9,990 available to buy. Owners will gain access to a new fan club with perks ranging from a Skype call with Steve, VIP passes to any show, and one-on-one virtual guitar lessons. The collection offers payments via MoonPay (allowing standard credit card purchases) and via a crypto wallet meaning fans not as adept in web3 can easily purchase the collection.
• Legendary guitar brand Fender has recently registered a series of trademarks around NFTs and the metaverse, citing their intention to provide “downloadable software consisting of virtual goods, namely digital artwork, photographs, videos and audio recordings,” all provided “as non-fungible tokens (NFTs).” This development follows another legendary musical instrument brand Gibson, which also registered its intent to launch a range of NFTs based on its iconic guitars back in January 2022. However, no official NFTs have been minted yet.
• After announcing his “MEFaverse” last month, we saw more Web3 activity from Wu-Tang’s Method Man: He andCappadonna have collaborated with NFT music platform Melos Studio on a new series of drops featuring exclusive new music and visuals. Perks for NFT purchasers include the opportunity to co-create music with the duo and a video call with the two artists.

Madonna, Steve Lukather, and Method Man x Cappadonna’s NFT drops all offer additional utilities beyond simply owning the collectible NFT itself, such as one-on-one video calls or access to exclusive events. For artists and fans not as familiar with or native to Web3, the collectible itself is arguably not driving value and the ability to use crypto. Instead, artists seem to be using NFTs as just another means to an end — a new route to bring fans into the artists’ communities, even ones that are already well-established.