Blog Post

The Future of Music based on Major Labels

January 24, 2022

It is no secret that the music industry is rapidly changing and is evolving technologically. Innovations like blockchain, metaverse and Web.3 are all giving new monetization channels to artists while also making them an integral part of the new web that is being created. To better understand, which type of technologies might be reaching the mainstream, observing the investments of the major labels might be a great indicator.

In the past year, major labels invested in a total of 17 companies in different stages from startup to scaleup. Warner Music Group, with their new liquidity from the public markets, was the most active investor in 2021 with 11 investments, following Sony Music with 5 and Universal Music Group with 1.

The 3 main pillars of investment have been gaming/metaverse, blockchain/NFT and community. Warner was an investor in Roblox, the popular gaming platform with teenage kids, and even managed to receive a very large return thanks to the company’s IPO but it also invested in studios creating games for the metaverse starting from the Roblox universe, digital experiences in the intersection of gaming and entertainment and esports. Gaming is becoming a new channel where the music industry is focusing, as videogames are the largest sub-industry of entertainment and there are many verticals between music and gaming. We have mentioned an array of examples in our previous articles of gaming-music events.

There is a great opportunity for musicians to increase their exposure through gaming as the industry is becoming a great complement to artists and is opening up new channels of monetization for them. In addition to this, the metaverse can increase the reach of any artist globally thanks to digital events and live streams; hence, saving time and generating a much larger ticket revenue.

Companies utilizing blockchain technology also received investments from major labels. Startups like Forte (creating token economics and NFTs within games) and MakesPlace are leveraging the scarcity created from the NFT technology to use it in the gaming and music industry. NFTs in music can be used to either split the rights of a track, create collectibles that can go up in value with the artist’s success and even unique digital merch that their fans can rock in their favourite games. All of these use cases are surely creating new monetization opportunities that the majors would not want to miss.

Community, maybe one of the most used words by startups in 2021, has become one of the most important factors to a successful company and artist. Fandoms around artists like Taylor Swift, where they can support her re-releasing all of her old tracks, have shown their full power and influence in an artist’s career. Finding the superfans and creating a community around them that can support the artist throughout their career is slowly becoming one of the most viable choices for upcoming and established musicians, especially with all of the monetization and investment options that they now have. This explains the large interest around startups like Fave and Overwolf.

On top of that, artist communities are becoming increasingly important as Rapchat has shown. Crowd-creating of a track, getting feedback from peers before releasing a song and helping each other to promote is becoming slowly the new norm when creating a track and companies like Sony have jumped in this trend.

Finally, other content creators remained an investment topic that the majors continued focusing in the past year. Helping artists increase their reach through different channels like YouTube is considered a must have for most artists and a great exposure channel as investments in companies like LICKD showed. Moreover, content producers in new geographies or new age groups also took the attention of the majors with their investments in focusing in content production in the Middle East or Tiger Media with child content.

Taking everything into consideration, we can conclude that the majors are looking for growth opportunities at the intersection of music with gaming, NFTs and content distribution. It is apparent that there is one common angle with all of these investments, increase the exposure and consumption of music while also monetization channels; thus deriving value in the long-term.

What do you think, are the majors investing in the future? How will independent artists be able to use these technologies? Will they be guarded behind a wall for some time before being democratized?