What Fortnite Creative Mode’s payout model means for music

The Score is our music-gaming vertical, written by Mat Ombler and focused on how the gaming industry is impacting artist strategy, across marketing, partnerships, and licensing opportunities.

AudioCipher: Text-to-MIDI VST

This issue of The Score is supported by AudioCipher.

Tired of staring at a blank DAW trying to come up with new ideas? It’s getting harder to find samples that other artists haven’t used. People are turning to AI music generators to solve this problem, but toggling between web browsers and the DAW is annoying.

AudioCipher offers a text-to-MIDI generator plugin that loads right within your DAW. The VST generates chord progressions and melodies based on any words or phrases you type in. Instead of spitting out polished MIDI loops, AudioCipher gives you raw material and a focal point to build around. You keep full creative control and let the meaning of the words inspire you.

To get started, choose a key signature, chord extensions, and rhythm automation. Then drag your idea to a MIDI track and use the piano roll to shape it into something you like. What words would you start with first?

What Fortnite Creative Mode’s payout model means for music

In our previous issue of The Score, we mapped out Epic’s music strategy in the wake of its Bandcamp acquisition a year prior — exploring how new user-generated content (UGC) tools and sync placements could pave the way for Fortnite to become a scalable, persistent platform for discovering new artists.

Another novel means of monetization for musicians on Fortnite centers around Fortnite Creative, a sandbox mode where select creators can build their own islands for players to explore.

In March 2023, Epic announced that 40% of net revenue from in-game Fortnite purchases — including their virtual currency V-Bucks, real-money transactions on items like Starter Packs and cosmetics, and Fortnite Crew subscriptions — would be distributed among Island creators.

Understanding the calculation of these payouts is important for the music business, as more music brands like Coachella build their own Islands in Fortnite. The way the gaming industry is approaching creator payments could also be a critical reference as rights holders continue to push for reform in streaming payout models at large.

While the official explanation for Fortnite Creative’s engagement payouts is low on details, what we do know is that their payout model blends popularity and retention. Fortnite defines popular islands as those that “attract new players and re-engage lapsed players,” and retention as “where players return day-to-day and week-to-week, indicat[ing] compelling gameplay.”

This approach echoes the alternative streaming payout models that major labels like Universal Music Group have been pushing for in the press. Such models advocate for artists to be rewarded not just based on a portion of total streams, but also for other factors like attracting and retaining new listeners over time.

ARTIST UPSIDE: Clearer routes to monetizing immersive music experiences.While the COVID pandemic compelled the mainstream music industry to embrace virtual-festival models, the beneficiaries of those experiences tend to have been bigger names like Lil Nas X or Ariana Grande. Fortnite Creative could offer artists, labels, and event promoters an avenue to build engaging, monetizable music experiences without having to partner directly with Epic.

However, there’s a significant caveat: Brands and even Epic itself also qualify as “creators” in Fortnite’s model. For instance, Fortnite’s Playwave Island series (which features experiences built around songs from Kali Uchis, YUNGBLUD, Mura Masa, and others) and Coachella Island (where players could explore virtual festival grounds and complete in-game quests in exchange for unlocking exclusive content) are both eligible to receive payouts under this system.

In other words, independent creators are competing directly with major companies and the very platform they’re building on for revenue. That said, Fortnite’s payout mechanics encourage the development of more persistent worlds, rather than one-off brand activations or fast cash grabs. This could create a window of opportunity for artists and brands to leverage Fortnite as both a marketing platform and long-term revenue generator outside of major album drops or festival seasons. As to who ultimately profits under this model, only time will tell.

DEVELOPER UPSIDE: Rising demand for specialized Fortnite development.Similar to how Roblox’s UGC tools caused a surge in businesses specializing in development and consultancy for Roblox experiences, we foresee a rise in studios offering similar services for Fortnite. Importantly, Epic is also incentivizing third-party Fortnite experience development with grants.

There’s an opportunity here for young developers with a thorough understanding of Fortnite’s ecosystem to build long-standing relationships with music managers and labels, and make a lot of money in the process. Naavik recently analyzed the highest-earning third-party developers in Fortnite, and estimated that more than 20 are making over $1 million annually from Creative Mode experiences. The projected monthly payout for Fortnite creator theboydilly, responsible for Kid Laroi’s Fortnite experience and the Fortnite Sound Wave series, is $5.2 million.

Roblox creators can now make and sell limited-run avatar gear

Roblox now allows registered creators to sell limited-run avatar gear, known as “Limiteds,” with 10% of resales on Roblox’s marketplace funneling back to original creators.

If you’ve been following blockchain and NFTs over the last few years, this mechanic will sound familiar. Creating digital scarcity around an artwork or brand via premium on-chain collectibles, and earning long-term revenue through a portion of secondary sales, has been a key motivator behind numerous cultural Web3 projects.

This trend is undoubtedly inspired by the successful virtual-good economies we’ve already seen in the gaming world for decades. In fact, Roblox was hiring a Web3 engineer in summer 2022, to be tasked with “help[ing] Roblox Marketplace to be web3-ready.”

That said, Limiteds have no underlying Web3 element, and they’re not completely open-access. You still need to apply to sell Limiteds on Roblox, as part of their wider UGC Program.

ARTIST UPSIDE: New, verified revenue streams.Metallica promoted the launch of their latest album 72 Seasons with a cross-promotional campaign on Roblox. Rather than building a “Metallica World” like you might see on Fortnite, the campaign integrated music and quests into some of Roblox’s most popular existing worlds, accompanied by the launch of official Metallica avatar items.

For context, merch sales for Lil Nas X neared “eight figures” as of July 2021, while Zara Larsson told the BBC in 2021 that she made over $1 million in virtual merch sales.

Of course, the official application process to sell limited avatar items on Roblox hasn’t stopped mass amounts of bootleg merchandise from appearing throughout the platform. A quick search for “Slipknot” or “Justin Bieber” brings up hundreds of unauthorized designs being sold, albeit for cheap. Try inputting the name of an artist you listen to in Roblox’s Avatar Shop and see what comes up.

Regardless, artists and their teams would do well to get ahead of this trend and develop a digital strategy for game merchandise as similar opportunities emerge.

Music partnership in mobile games continue to pick up steam

At Water & Music, we’ve been closely covering the rise of immersive music experiences in mobile games, with notable examples including Blackpink in PUBG and Justin Bieber in Garena Free Fire.

Two other mobile games have made new music splashes in the last month: Brazilian artist DJ Alok joining forces with Honor of Kings, and K-pop band Itzy signing up to be global ambassadors for the Mobile Legends: Bang Bang (MLBB) All Stars event.

Both of these mobile games are 5v5 multiplayer-online-battle-arena (MOBA) titles, a genre often associated with Riot Games’ League of Legends and immensely popular in China. Honor of Kings has 100 million daily active players and generated over $100 million in March 2023, while MLBB generated over $10 million in March 2023 and more than five million downloads. The figures for Honor of Kings are particularly impressive, considering the game was only available in China until its release on March 8 in Brazil — one of the fastest-growing mobile markets in the world.

DJ Alok, one of Brazil’s most prominent DJs, also grew up obsessed with video games, and had previously collaborated with Garena Free Fire MAX. In terms of conversion metrics, his latest partnership with Honor of Kings seems to have been a success, with 43% of over two million downloads to date coming from Brazil. The collaboration was marked by a new Honor of Kings-themed song for the collaboration, “Ready Set Go,” complemented by themed in-game assets and events available to players in Brazil.

Itzy’s collaboration with MLBB, while not featuring a new song, included themed in-game items such as new skins and quests, and marked MLBB’s first K-pop collaboration. This follows a notable rise in K-pop and gaming collaborations, with artists including Blackpink, BTS, and TWICE recently joining forces with gaming studios such as Tencent and Krafton.

ARTIST UPSIDE: Leverage the underexplored mobile games market beyond sync. Gaming is the largest sector in the entertainment business, and mobile games generate more than 50% of its global revenues.

Apple’s App Tracking Transparency (ATT), introduced in 2021, has made user acquisition more challenging for game studios, due to opt-in requirements for data tracking. In response, studios have increased their focus on branded collaborations and live events to tap into new audiences.

Artists would do well to monitor mobile games that align with their brand to gauge potential opportunities — especially if they can monetize in-game events with skins and digital merch, or offer game studios exposure in new markets.

In other news