TL;DR
Web3 presents new business and revenue sharing models for the entertainment industry.
As Web3’s popularity continues to grow, artists, sports teams, brands, and designers have discovered new ways to engage with their fans.
At the same time, musicians, athletes, and designers are exploring alternative methods to monetize their creations.
Introduction
Web3 refers to the next generation of Internet that relies on blockchain technology, is decentralized, and gives users greater control of their data. Since the concept’s initial emergence in 2014, its adoption has skyrocketed. In fact, it’s expected that by the year 2026, about two billion people worldwide will spend at least an hour a day in the metaverse to socialize, work, shop, or go to school.
Brands, personalities, and teams have spotted innovative opportunities to not only engage with their fans in more novel ways, but also to monetize their craft in a more equitable manner without intermediaries.
Why Are Brands Getting Involved?
Built on the blockchain, Web3 offers users more transparency, reliability and trustlessness than Web2. It also allows for immutable ownership of digital assets in the form of non-fungible tokens (NFTs). This has given brands the opportunity to tie real-life experiences and products to the digital assets their communities own.
Instances of this include Hublot’s limited edition line of 13 timepieces accompanied by 13 corresponding NFTs, and Decentraland’s Metaverse Music Festival that featured performances by world-renowned artists Soulja Boy and Ozzy Osbourne in the form of avatars.
Web3 has presented brands and personalities with the opportunity to connect with their fans in unprecedented ways. Three industries in particular have already built elaborate experiences and products by leveraging Web3 and blockchain technology — music, fashion, and sports.
Web3 in Music
The music industry has developed rapidly in the last two decades, as we went from listening to CDs using a Discman to having access to millions of songs on our mobile devices. Web3 takes this a step further by presenting new opportunities for musicians to connect with fans, protect their intellectual property (IP) rights, and generate revenue from their work.
IP laws and ownership form the basis on which the music industry operates, with ironclad contracts and documentation that dictate who gets a share of the $26 billion global music industry.
Web3 is influencing the legal component of the music industry by leveraging blockchain technology to create secure, transparent, and immutable records of ownership and royalties for music creators and rights holders. As such, Web3 allows artists and other stakeholders to benefit from more equitable distribution of revenue and greater control over their music.
One Web3 music platform facilitates the release and purchase of instrumental tracks to which lyricists can apply their vocals as NFTs. Owners of these NFTs are then granted IP rights related to the music they’ve purchased, establishing fresh avenues for artists and creators to produce open-source music.
This also gives musicians the opportunity to circumvent intermediaries such as record labels or streaming services that typically receive the lion’s share of revenue. With Web3, musicians at all levels of their career have the opportunity to create self-controlled revenue streams through tokenization and fan engagement.
Web3 in Sports
Similar to the music industry, Web3 is also giving sports teams, athletes, and their fans numerous opportunities to engage with one another in ways that were unheard of before. This includes digital fantasy sports games powered by game cards that exist as NFTs.
For example, one NFT platform combines Web3 and sports by digitizing soccer, baseball, and basketball athlete cards to allow users to create their fantasy teams. The players are also able to submit their line-ups to global tournaments to compete against one another, giving players a new way to connect with other fans. This allows players to personalize their dream matches virtually on platforms that are backed by the biggest names in the sporting world.
This heightened connection and sense of community with fans is only the beginning. Web3 has the potential to transform the sports industry by creating more transparency, ownership, and autonomy. This includes leveraging smart contracts for sports event ticketing and signing sponsorship deals on the blockchain to ensure transparency and immutability.
Web3 in Fashion
Web3’s transparent nature allows fashion brands to create new business models, implement anti-counterfeit measures, and interact with customers and communities through personalized experiences. Brands are now launching their Web3 strategies, with the focus shifting from short-term monetary gains to longer-term value alignment for their NFT holders.
Louis Vuitton, Paco Rababanne, Gucci, and Prada are among the brands that have already released their own NFT lines. Some of these fashion NFT projects were also issued alongside physical pieces from their limited edition or vintage collections.
In fact, Gucci’s two-part SUPERGUCCI NFT collection was so well-received that the Web3 company it partnered with to launch the collection went on to raise over $38 million and strike deals with other major brands looking to launch their own collections.
High-end jewelry brand Tiffany and Co. is a prime example of a label that has bridged the world of NFTs with physical items. Owners of popular NFTs such as CryptoPunks hold IP rights that enable them to monetize their assets. The label has leveraged this opportunity by designing customized jeweled NFTiff pendants for CryptoPunk owners, featuring each owner's specific Punk as a physical piece of jewelry.
Web3 also addresses one of the fashion industry’s biggest issues: supply chain transparency and traceability. With Web3, every step of the supply chain can be recorded on a tamper-proof blockchain ledger, enabling secure and decentralized tracking of goods from the source of production to the point of sale. This immutability is the key to resolving issues such as human rights violations and counterfeiting.
This heightened level of transparency and traceability can help to prevent human rights abuses, environmental violations, and other unethical practices prevalent in the fashion industry. However, this is dependent on whether or not everyone involved in the supply chain is able and willing to enter this data onto the blockchain.
Limitations
While Web3 can bring about positive change in the aforementioned industries, it comes with several challenges and limitations. Implementing Web3 and blockchain technology requires a level of technical expertise that is beyond the capabilities of many musicians, athletes, and fashion designers, and even their teams.
Moreover, Web3 developers are expensive to hire. This could create a barrier to entry, preventing smaller brands and personalities with lower budgets from fully enjoying the benefits of Web3.
Web3 adoption also remains a challenge as the vast majority of people haven’t interacted with Web3, which presents two main concerns. Firstly, brands and personalities that want to embark on Web3 projects will need to evaluate if the estimated revenue from adopting Web3 justifies the costs attached to it.
Secondly, supply chain traceability will depend on whether or not everyone involved in designing and manufacturing is able and willing to use the system that tracks this process on-chain in the first place.
Closing Thoughts
Web3 has the potential to revolutionize the fashion, music, and sports industries in myriad ways. Not only does it allow fans and communities to engage with their favorite brands and personalities directly, it also gives consumers unprecedented transparency of supply chains and immutably enforces IP rights.
Overall, the potential of Web3 in fashion, music, and sports is vast, and we are only beginning to scratch the surface of what’s possible. As Web3 continues to evolve, we can expect to see more exciting innovations that will transform these industries for the better.
Further Reading
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