Welcome to the Block & Mortar newsletter! Every week, I bring you the top stories and my analysis on where business meets web3: blockchain, cryptocurrencies, NFTs, and metaverse. Brought to you by Q McCallum.

Reading online? Subscribe to get this in your inbox whenever it's published.

That was quite a game this weekend! Puppy Bowl XIX, that is.

I’m not sure what this “Superb Owl” thing is about but it sounds very noisy. And devoid of crypto commercials this time around.

First point goes to the bag shop

Last week, I figured the Metabirkins trial would go on for a while. Isn’t that how this usually works? Month after month of legal teams presenting arguments, judges looking on with stern facial expressions, and only after several rounds of that do we get a ruling.

We’ll just redefine “a while” as “eight days.” That’s how long it took a judge to decide that Rothschild’s Metabirkins NFTs did indeed infringe on Hermès’s intellectual property rights. And per a piece in The Financial Times, Rothschild has “been ordered to pay $133,000 in damages to the brand’s owner Hermès, a victory for the French luxury group in a landmark case over how US intellectual property rights are applied to digital assets.”

While this trial didn’t take that long, Rothschild plans to appeal. So it’s possible that the wider arc still has a ways to go.

A new wave of digital celebrities

Celebrity is a special kind of asset.

On the one hand, if you are famous, your very presence sells things. Name recognition can convince people to buy your next comedy special, or kickstart side projects like your line of booze. It can also sell other people’s stuff, and they will pay you to star in their movie or wear their brand for a photo op.

On the other hand, people make for risky brand ambassadors. They have the nerve to grow older – even pass away! – before they can play the lead in your new summer blockbuster. (But technology is working on that. Sort of.) Or their messy private life becomes public and the media backlash torches a lot of your revenue.

That’s why I’ve previously lauded Kingship – the synthetic music group built on four Bored Ape Yacht Club NFTs – as an example of risk management in the celebrity space. Their scripted, curated backstory guarantees that you’ll never uncover a band member’s racist tweet from ten years ago. (That’s also because That Guy is closing off Twitter as a platform. But I digress…)

All of this is to say that Korea’s Kakao Entertainment are also trying their hands at some synthetic, metaverse-first music groups:

[Kakao] is working with a mobile gaming company, Netmarble, to develop a K-pop band called Mave that exists only in cyberspace, where its four artificial members will interact with real-life fans around the world.

Kakao is also behind “Girl’s Re:verse,” a K-pop-in-the-metaverse show, whose debut episode on streaming platforms this month was viewed more than a million times in three days. For both projects, Kakao is contemplating album releases, brand endorsements, video games and digital comics, among other things.

Compared to Kingship, the Kakao efforts feel like they’re moving at a faster pace. MAVE released their first single, “Pandora’s Box,” three weeks ago. And thanks to the Girl’s Re:verse game show format, the public gets a peek into the progress of the as-of-yet unnamed group. (Not to mention, they’ll already have a loyal following before they’ve recorded their first song. Double points for the marketing approach here.)

Kakao also seems to have mapped out a broader strategy – or, at least, been more open about their ambitions – than Kingship:

[Kakao] is billing Mave, its artificial band in progress, as the first K-pop group created entirely within the metaverse, using machine learning, deep fake, face swap and full 3-D production technology. To give them global appeal, the company wants the “girls” of Mave to eventually be able to converse in, say, Portuguese with a Brazilian fan and Mandarin with someone in Taiwan, fluently and convincingly.

That part I emphasized seems a couple steps ahead for a group of synthetic performers. But maybe, not so much of a stretch? We already dub character voices as we release TV shows into new markets. Sometimes we tweak plots or, as with Sesame Street, introduce new characters to better fit the venue. I get the feeling that Kakao has been thinking about this for a while.

One last point occurred to me as I was preparing this segment. When I look at MAVE, Kingship, and digital fashion models, I see that a metaverse property is a native venue for virtual celebrities.

In turn, I expect that commercial interest will drive compatibility and portability standards across metaverses. Fashion houses, film studios, and record labels will want minimal friction as they ferry their synthetic stars from metaverse to metaverse. Stopping to rewrite those characters for each property will add a lot of friction to deal flow. And nothing gets executives to invest money quite like the thought of losing future money.

Cutting the clutter

I last mentioned web3 property company Roofstock back in October. They’ve recently completed their blockchain-based home sale through a blockchain transaction.

(As a refresher: with Roofstock, you technically don’t buy the property outright. You buy the NFT that represents ownership of a company, which just happens to own the property. Hey, if we need a couple abstraction layers to get new technology playing nicely with old laws, I’m all for it.)

One point about this sale caught my eye:

Roofstock partnered with Teller protocol to allow borrowers to raise loan requests and finance their purchases through USDC.homes.

Once a lender accepts the borrower’s request, the protocol will “permissionlessly [use] funds to purchase the LLC NFT,” then transfer the NFT to a smart contract escrow vault until loans and interests are repaid.

[…]

“The DeFi world is so much cleaner in terms of how financing can be done,” [Sanjay Raghavan, head of Web3 initiatives at Roofstock] said. “Financing can be instantaneous, so you don’t have to wait three, four weeks to send out pay stubs, bank statements, tax records and all these things to a lender who’s then sitting in underwriting for weeks.”

Home buyers know how much of a pain this process can be. Paper shuffling, waiting, repeat. Similar to the California DMV segment from last week, and the Keynan supply chain project I mentioned in November, Roofstock’s approach is a way for blockchain technology to reduce frictions in an existing process.

A Paris adventure. Sort of.

Block & Mortar has only mentioned Paris Hilton twice before. Which is odd, since she’s long been an active investor and explorer of web3.

(Yes, people panned that bit where she and Jimmy Fallon showed off their Bored Ape Yacht Club NFTs. Fair enough. But don’t let one talk show appearance fool you.)

In newsletter #25 I mentioned Hometopia, her social game in which people build virtual houses in the same neighborhood as their friends. HIlton’s latest venture, Parisland, is another social experience gone digital:

[T]he gamified experience is being billed as an “imaginary reality show” in the metaverse. Besides hitting on random strangers online, activities in Parisland include shopping for outfits, selecting wedding rings, investigating a secret inside a burger (yes, really), and “rescuing a castaway.”

It would be easy to write this off as Hilton simply recreating the existing world in digital form. (“We already have reality dating shows, right? What does the metaverse angle add?”) When it comes to emerging technology, though, this is a wise first step. It doesn’t matter that a select few can see The New Thing for what it really is and know what’s coming down the road. They can’t start with that vision, because that’d be too jarring for newcomers. Building on familiar concepts smooths their on-ramp and gives them time to acclimate.

Parisland also gets points for employing gamification. Done well, that will provide structure and a sense of purpose to participants. Try to see the rules – yes, even the promised hamburger exploration – as a guided tour to what a metaverse experience can offer.

Meta tries to bump some numbers

How do you boost membership in an exclusive club? Easy: you relax the entry requirements.

The fancy restaurant makes jackets and ties optional. The elite school blurs the line on applicants’ GPAs and standardized test scores. Facebook Meta reduces the minimum age for its Horizon Worlds metaverse property.

(OK, first they acquired a VR fitness app company. But that will only do so much to attract new users …)

Loosely translated from an article in Les Echos:

Adolescents as a path to growth? Given that its immersive, online virtual platform Horizon Worlds has proven unpopular, Meta plans to open it to people aged 13-17. (This is from an internal memo, as noted by the Wall Street Journal.)

[…]

The goal of Mark Zuckerberg’s company is to improve the market penetration of what he hopes to be the future of social networks and, more widely, the web. Far from its initial goal of 500,000 users in January – and one million by the end of 2023 – Horizon Worlds boasts just 200,000 people. This is after a bump in December, connected to Christmastime purchases of its Meta Quest VR goggles.

The last time Facebook removed the velvet rope, in 2006, it was to grow the platform beyond college students. We all saw what happened then. So maybe this Horizon move will provide that much-desired bump in numbers? Maybe.

Or, maybe not? Remember when we all learned that Instagram is bad for teenagers? That was not even two full years ago. No may not be the best time for another Facebook entity to pursue the youth market.

And when New York Times journalist Kashmir Hill visited Horizon worlds last year, she noted that the place is already full of adolescents. What percentage of teenagers who are interested are already there, hiding under their parents’ accounts? If it’s close to “one hundred,” Horizon’s numbers would remain flat. And worse still, what if the place loses its appeal as forbidden fruit? Horizon risks shedding users as a result of this move.

Hmmm.

Just last week, I complimented Mark Zuckerberg on navigating a tense relationship with his investors. Now he’s giving us this lame numbers game. I’m not sure what to make of it.

The wrap-up

This was an issue of Block & Mortar.

Who’s behind Block & Mortar? I'm Q McCallum. I've spent the past two decades in the emerging-tech space. And I'm very interested in web3 use cases.

Credit where it's due. Big thanks to Shane Glynn for reviewing early drafts. Any mistakes that remain are mine.

Reading this online? Or as a forward? Why not sign up? Get Block & Mortar news in your inbox, whenever it's published.

Privacy statement: I don’t share/rent/sell your personal info. Seriously.