August 30, 2022

Metaverse dive bars, edible adverts, and a little AI

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

So which one will be known as the dive bar?

The world is still sorting out what counts as a "metaverse" and what it's good for, but metaverse properties are each starting to find their role and vibe. This is important for three reasons:

  1. While some properties will certainly want to become The Everything Place, they know deep down that they'll develop a reputation for fulfilling a particular consumer interest and need. This is the same with restaurants and bars: you can't be the sports bar and the upscale wine bar and the dive bar all at once.
  2. If you know that you're going to become The Place for some Specific Thing, you want to proactively choose your Specific Thing. There is no empirically "right" or "wrong" answer, but you have to pick one. You don't want to be known as the dive bar of metaverse properties? Your setup, operations, and advertising should reflect that.

(No, we didn't miscount. We'll get to the third reason in just a moment.)

Consider the big names in the metaverse properties. Roblox and Fortnite? People go here for events, like games or concerts. Horizon Worlds? This is where you pretend to pay attention to work meetings. The Sandbox? It's feeling pretty retail-focused thus far.

All of that leads to:

  1. Other niches or roles will certainly shake out over time. The larger, established players will genuinely miss some (cue The Innovator's Dilemma) and they'll pretend to miss others (note how the big web2 players get squeamish around adult content). Those new niches will leave room for upstart and specialty players to find their space.

All of this is to say: while Otherside has yet to officially launch, parent company Yuga Labs is dropping some hints (some fields might call it "telegraphing their moves") as being The Place for Celebrities. That may even narrow to The Go-To Venue For Celebrities With BAYC NFTs, when you consider that Snoop Dogg and Eminem performed in Otherside, as their BAYC characters, at the recent MTV Video Music Awards.

This is when you might ask whether we took this philosophical detour just to mention Eminem and The S N double-O P in a newsletter. The answer is, no. We took this detour to ask: if MTV is hosting a Video Music Awards show … does that mean they're actually showing music videos again? Feels like it's been a while.

web3 spotlight: Entertainmint

We recently caught up with our friends at Entertainmint. They're not just applying web3 technology to the world of indie streaming content; they've completely reimagined the space, bottom-up, through a web3 lens.

(Full disclosure: when we say "our friends," that's not some euphemism for "a client" or "people paying us to mention their name." They're actually our friends and we think that you'll dig what they're up to.)

Specifically, Entertainmint provides tools for creators to raise funds and build community around their work. And they've just completed their first "show mint" to help Grace Ng turn her Crash Punks NFTs into an animated series. As noted in their recent announcement:

We were able to raise 25k for Grace via a multi-tiered mint in five tiers. We helped fans not just buy tickets and see the show--we helped them be IN the show with their Crash Punk, produce the show via an associate producer pass and we even have a Sound Sponsor! We sold 79 NFTs over 2 chains--Opensea/ETH and BTC/Stacks, and they ranged from $100 (general admission) to $10,000 (associate producer.)

Want to learn more about the Crash Punks animated series, or anything else Entertainmint is up to? You can check out their Decentraland screening theater, sign up at their website, join their Discord, or follow them on Twitter. Hell, maybe you'll even mint a show …

Be yourself, wherever you go

Self-expression is a key element of metaverse properties. You can personalize your character, or avatar, to just about any shape. You can then deck it out with clothes or accessories as you see fit. And given the work people put into creating these avatars, and the attachment they develop to them, it's understandable that they'd want those representations to carry between different metaverse implementations. It's no fun if you have to rebuild and then maintain your avatar for each metaverse you visit.

All of this is where Ready Player Me fits into the puzzle. They're not creating their own metaverse implementation. Instead, Ready Player Me generates a photorealistic avatar that can move with you from metaverse to metaverse.

Taking a wider view, this is about so much more than just avatars. Ready Player Me is taking a stab at addressing inter-metaverse interoperability, a topic that will only become more important as more virtual worlds appear on the scene. And their fundraising – a $56 million Series B – hints that there is a serious business interest in addressing this problem. There will no doubt be other metaverse interoperability gaps, and we expect new companies to spring up to resolve them.

Watch those bad habits

Big-Corporate-Speak can be rather opaque, and Management Consultantese is an especially frustrating dialect. So we understand why someone would describe a line from a McKinsey & Company interview as "business dude lorem ipsum."

While the tweet was a good laugh, we actually enjoyed the full interview. Yes, the quote highlighted by the tweet definitely raised an eyebrow. But the guest – Brian Solis, Salesforce global innovation evangelist – struck us as someone who has been thinking very hard about web3.

Consider part of his response to the question "How should businesses approach the metaverse?":

[T]here’s a disconnect between the strategy, the intention, and the ultimate user experience. It’s okay to market. It’s okay to brand. And it’s okay to deliver products within these networks because that’s what a business does. But do so in a way that adds value, that respects the rules and the culture of any one of those communities, so you become a participant in those communities.

We wholeheartedly agree. While we all begin our journey with our web2 knowledge, we'd do well to remember that web2 is not web3. Let's be mindful of trying to shoehorn old habits to this new world, shall we? Doubly so when you consider that norms, some of which run contrary to existing business practices, have already taken shape.

That Solis specifically mentions marketing here is telling. Marketing and advertising loom large in web2, and not always in the most positive light. The intrusive web2 marketing practices that rely on building lists, identifying specific individuals, and pestering targeting directly contacting them flies in the face of web3's ethos of pseudonymity. In web3, fans let you know that they're interested. Not the other way around.

One could argue that this active, customer-driven idea of web3 brand affinity fandom is stronger than its passive, one-sided web2 cousin. To get there, marketers will have to embrace this world in which they derive greater benefit but have less control. And they may have some trouble letting go. (For reference, consider how brands had to adjust to social media: they would have to interact with consumers in the public eye, and they no longer had the loudest voice in the room.)

To the marketers who expect to treat web3 as web2, redux, we ask that you reflect on Brian Solis's point. It'll pay off in the long run.

Edible adverts

(Maybe we'll call them "adibles?" Maybe? Yes. We're going with adibles. Hang on a sec, we're looping in our legal team to formalize this one.)

Speaking of marketing …

You call it a "blank space." We imagine that marketers see it as a "missed revenue opportunity." Why else would they plaster ads all over walls, websites, smartphone screens, and now … candy?

No, seriously. We don't mean the age-old practice of candy manufacturers stamping their own logo into a chocolate bar. We mean running someone else's logo on their product.

Remember last year when Universal Music Group launched Kingship, a virtual band made of Bored Ape Yacht Club (BAYC) characters? Kingship apparently needed to raise more awareness so they partnered with Mars, the parent company of M&Ms, to print their BAYC characters on the candies. Mars was all too happy to take part:

*"Consumers' expectations for what they want from their favorite brands [have] shifted, and at Mars, we know we need to be more innovative than ever with such a culturally famous brand like M&M's," said Mars Wrigley Global Vice President Jane Hwang, in a release.*

(Is anyone else feeling a strong "Oreo CEO" sketch vibe there? No? Just us?)

It's easy to make fun, but is this Kingship-M&Ms relationship any different from a movie tie-in? We think not. Only a small part of that counts as "web3" (we'll get to that in a moment); the rest is simply Putting Someone's Logo On Something.

This Kingship move demonstrates why business-minded people would buy NFTs in the first place: those "silly ape JPEGs" come with built-in notoriety. Consumers recognize the BAYC artwork style and they certainly talk about the images. The mere act of using one in your business will get you some attention. (Case in point: we're writing about it right now …) It's sort of like how some independent hotels will pay to wear Famous Hotel Brand's logo: customers recognize the name and that helps the property rise above the infamous "discovery problem."

Better still (and this is the aforementioned web3 connection) Kingship is using this to drive people to its loyalty program:

The band has also released its own NFT “key cards” that provide exclusive benefits and access to holders. NFT owners were given early access to purchase the [limited edition] M&M’s candy.

It may be too late to buy a Kingship NFT and get your M&Ms, but who knows what they'll offer token-holders next time? This builds a buzz, which may just drive adoption.

The takeaway lesson here is: if you have printable surface area on your foods, contact some NFT holders – well, those with commercial rights – and ink a deal. Candy bars and cookies? Good. Ground meat? Bad. Pasta? Maybe if you get creative, sure.

Scam O'Clock™: Deepfake edition

Four weeks. Our last Scam O'Clock™ segment was a whopping four weeks ago. And now it's back.

And as you may recall, the trend in web3 scamming has been to impersonate people and organizations that potential victims would trust. This is hardly a new technique, and it's not unique to web3. Remember a few months back, when a cofounder of media startup Ozy (allegedly!) impersonated a YouTube exec on a phone call with Goldman Sachs? The idea was to make Ozy look more legitimate in Goldman's eyes, in support of a financing deal.

Well, if history repeats, crime evolves. Taking a step beyond hacking Discord servers and Instagram accounts to steal NFTs, crypto hackers have recently been using a deepfake – an AI-generated doppelganger – of a Binance executive on video calls with crypto projects:

The [deepfake] was able to fool these projects into believing that they were being considered for listing on Binance and that [Chief Communications Officer Patrick] Hillmann was part of this operation.

The listing scheme was discovered when these members contacted Hillmann to thank him for his help in the alleged listing opportunities. However, he had no knowledge of these meetings because he is not part of the listing process at Binance.

Look, we could roll our eyes and wonder why these scammers don't get real jobs. We could even ask why they didn't deepfake a Binance executive who was involved in the listing process. But, at least for now, we'll just smile that AI and web3 are playing so nicely together.

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Note: We’d like to thank Shane Glynn for reviewing early newsletter drafts. Any mistakes that remain are ours.