The World’s Largest Record Company Is Creating an NFT Super Group
(Bloomberg) -- The world's largest music company has created a band of four virtual apes.
If that sentence makes you question your sanity — or the state of western civilization — you aren’t alone. Universal Music Group NV is combining two hot digital concepts that you’ve likely read about in the past year: nonfungible tokens (NFTs) and the metaverse, Thanks to the appreciation of cryptocurrencies and some very famous boosters, like Elon Musk and Mark Zuckerberg, they have gone from esoteric to ubiquitous in just a few months.
And while the NFT boom has often felt like it involves a bunch of people who made too much money buying crypto, major corporations are trying to figure out how to leverage both NFTs and the metaverse to their advantage. Facebook, which has changed its name to Meta Platforms Inc., is the most prominent example, embracing the concept of an interconnected virtual world.
Universal Music, the home to top-selling musicians like Drake and Taylor Swift, is working with collector Jimmy McNelis to convert four of his NFTs into a band called Kingship. Kingship consists of four digital characters — three bored apes and one mutant ape — all part of an NFT collection known as the Bored Ape Yacht Club. The club is one of the most successful NFT stories of the past year; it gave anyone who bought one of the apes full commercial rights to use the image.
10:22PM, one of Universal’s labels, has hired a team of crypto artists and animators to turn the two-dimensional apes into three-dimensional beings. The company will record music for Kingship that it releases on streaming services. The “band” will perform and participate in video games, virtual-reality applications and across the constellation of digital experiences known as the metaverse.
"You can call it an NFT band, or think of them as characters," Celine Joshua, the head of 10:22, said in an interview this week. "The characters will come to life. The apes will come to life."
Joshua and her team are going to create these characters stories’ from scratch. They will put together a marketing campaign to introduce the apes to potential fans, explain how they met and describe who they are. "It's just like just like the way we introduce new artists to the world,” she said.
Joshua is the kind of executive who tries to stay ahead of the next big financial opportunity. For the past few years, that has been social media (or Web 2.0 in tech parlance). She has tried to convert the social-media personalities Lele Pons and Chantel Jeffries into musicians, and oversees much of the label's relationship with social platforms like YouTube.
As technophiles coalesce around the idea of Web 3.0 — a decentralized internet — Joshua has jumped into the world of NFTs. That's how she met McNelis, one of the leading collectors. McNelis acquired hundreds of ape NFTs from Yuga Labs LLC, the creator of the Bored Ape Yacht Club, and has a collection that he estimates is worth more than $100 million. He was an early buyer of Ethereum, a cryptocurrency.
Joshua pitched him on the idea of creating a new group, and picked four characters that she thought would work as a band. That includes a golden ape, another of which just sold at Sotheby’s for $3.4 million. Kingship's golden ape is valued at around $190,000 at current prices, according to offer data on OpenSea, the largest marketplace for NFTs.
“We’re still trying to figure out exactly what it is,” McNelis said. “I’d like to see Kingship be one of the main ways the mainstream is introduced to NFTs in the metaverse.”
While Joshua has a novel idea — an NFT band — a virtual band is not unprecedented. In 1998, musician Damon Albarn and artist Jamie Hewlett created a virtual quartet called the Gorillaz. Albarn made the music and Hewlett designed four animated characters who appeared in music videos and the occasional interview or live performance. Albarn also gave interviews representing the group, and performed alongside musical collaborators.
What’s different this time around is how Kingship will make money — and interact with fans. Joshua plans to sell NFTs of Kingship, giving buyers access to exclusive music experiences and real-world events. Think of it as fan club for the virtual world.
Fans have always been willing to pay large sums of money for items related to their favorite groups, be it a T-shirt, a ticket stub or old guitar. What's different now is that people are paying ever more for those collectibles, whether they’re trading cards, shoes or NFTs.
Many of the big NFT sales have felt like empty cash grabs — opportunists taking advantage of the moment to sell a virtual good that isn't all that special. “There will be a lot of tourists in the space who drop out," said Joe Conyers III, a former music executive who now works on NFTs at Crypto.com
True believers say NFTs offer buyers something real — a bit of ownership in artists they like or access to special experiences. NFTs also speak to the blurring lines between our tangible and virtual worlds. Facebook renaming itself Meta could be just another corporate rebranding like Google becoming Alphabet Inc. But the company is correct that people are living more online and have embraced virtual experiences like concerts in video games and virtual goods like avatars.
The challenge for Kingship will be the same one all bands face: the art has to be good.
©2021 Bloomberg L.P.