Metaverse, Livestreamed Concerts Are Potential Music Industry Boon: WMG

The interactive promise of the metaverse will take music’s ability to be “the one true global language to an entirely new level,” said Warner Music Group CEO Steve Cooper on a Monday earnings call. Cooper sees the metaverse as “super exciting” for the music business, due to its potential scale and global reach.

Cooper pegged the potential metaverse audience at “hundreds of millions” of people who are spending increasingly more time in interactive environments. That compares with music distribution now that's typically not interactive, he said, but more a “push-pull” environment. Metaverses go beyond push-pull, he said, noting the combination of social, gaming, entertainment and “probably more things that I’m just unaware of.” Interactivity involving content, people and communities “is bringing music and our artists to those environments,” he said. He envisioned the “convergence of content, artists, fandom and distribution.”

Cooper cited Nigerian artist CKay, signed by Warner Music South Africa after he was discovered via a partnership with Chocolate City Records. The singer-songwriter made history by scoring the most-watched music video globally on YouTube during a two-week span in October with the song "Love Nwantiti." The song was released a year ago but got a second wind this year when TikTok users began recording videos of a dance routine set to it. "Love Nwantiti" also has a following on Instagram and Spotify, Cooper noted.

Amid growth in nontraditional areas, subscription streaming “still has tremendous runway ahead of it,” said Cooper. Growth from price hikes in developed markets and increasing penetration in emerging markets is being supplemented by “emerging platforms that are incorporating music as a critical feature of their user experiences,” he said.

Warner Music is positioning itself at “the intersection of social, gaming, fitness, VR and music,” Cooper said, saying it's the first major label to partner with disruptive players in “dynamic and rapidly growing spaces.” The company is the first major music label to partner with Twitch, which should lead to more collaboration in the future, he said.

At a virtual audio industry conference last week, Futuresource analyst Alexandre Jornod referenced growing opportunities for musicians to reach new audiences in nontraditional ways, including the metaverse, nonfungible tokens (NFTs) and concert livestreaming. Experimenting with new means of engagement is especially important to reach younger demographics, Jornod said.

TikTok, YouTube Shorts, gaming platforms, social media, livestreaming and fitness apps are becoming “key to driving discovery,” said Jornod. Futuresource data shows over 23% of music listener survey respondents discover music through social media, 36% on YouTube, he said. Podcasts are becoming a good way for artists to share their stories and talk about their music, Jornod said; they’re also another outlet for playing music, which drives more discovery and consumption.

Music is entering a "new era," Jornod said, noting an influx of capital from initial public offerings including Warner Music and Universal Music. Investors are now seeing value in music and in songs, he said, citing the rise of NFTs, a “booming market." There are "so many new ways for artists to monetize their work.” Consumers can invest in songs and buy shares of songs on NFT platforms. Some artists have generated significant profits in the space, he said.

Livestreaming is another future growth area for musicians to reach new audiences, Jornod said. Business models are still in the experimental stage, but livestreaming gives artists new ways to create fans and engage them. The analyst said he expects hybrid livestreaming and physical concerts to become more common and a “key part” of the live music industry. The next step is to find the right formula and business model for livestreaming to be financially viable, he said.

On the metaverse, Jornod highlighted Facebook’s $10 billion spend, underscoring the importance of the immersive world to tech companies. The metaverse could be a “true game-changer” for the music industry, allowing consumers to listen to music, go to concerts, socialize and buy virtual merchandise “in a virtual and immersive world.”

Jornod called the metaverse “a whole new ecosystem” that would be created “without any physical limitations.” The big question is “whether consumers will be really willing to engage with the metaverse outside of the traditional gaming audience." The key to success in the metaverse will be for music companies to offer a truly unique experience that appeals to a mainstream audience, he said.

In a Monday investor note, LightShed Partners analyst Brandon Ross said the term metaverse isn't only a buzzword, and tech giants, entrepreneurs and venture capitalists “have become more keen to the opportunity and are investing significant time and dollars into carving a role in this future.” LightShed believes there will be several winners in the space and the game platform Roblox, for one, has a chance to be at the top. Ross compared Roblox “to the AOL of the early-1990s,” being a packaged, self-contained “preview of the internet we would come to know in Web 1.” Today, Roblox may be a preview of the coming “next version of the internet, which will not live alone on any one platform.”

Warner Music and Roblox held an immersive performance on the Roblox platform in September to kick off Twenty One Pilots’ Takeover Tour album. It was said to be the first dynamic set list dictated by fans in real time. Preconcert quests involved popular Roblox experiences featuring custom portals promising to "transport users into the pre-concert venue," along with custom-designed virtual merchandise.