How Music Will Deliver the First Mainstream Consumer Success in Web3 - TOKEN2049 Singapore 2023

uh good afternoon everyone I am indeed John V uh CEO of Napster so I'm going to take you through a little bit of a history of digital music where we come from where we are now and where we feel things are going and again the theme is that after all the years of web 3 there's been a lot of utility and building on infrastructure infrastructure on infrastructure we think it's time for main stream on-ramp uh to bring regular consumers and fans into the business and we think music is that unlock so This Is 40 Years of kind of media or music on one slide so back in uh in the '90s there was actually a DJ in China and then started my career at record labels in uh in Hong Kong and uh and Tokyo so I love the region I then went to the US and joined a company called Burman and we actually invested in the old Napster so back in the day we invested 50 million in the peer-to-peer Napster and as the guy before me was talking about Napster was the first truly decentralized platform in the world so music was the unlock you could get any music in the world you could chat to people so we invested money in that company and then we took a billion dollar offer to the music industry to legitimize this first peer-to-peer Network and I think unlike platforms now that are kind of decentralized we were fully decentralized so all of us were the network um so we took that offer to the music industry we had Community we were decentralized the model we were going to have was $9.99 and we were going to pay what would have been our node holders as a percentage of the of the price of the subscription we had playlisting we had contextual Commerce with merch and ticketing it was amazing it was like really really good and this is 1999 so unfortunately my boss at the time was a German guy and he was very aggressive with the music industry and we weren't able to get the deal done so uh after that the streaming industry was born and the Napster brand went on on to another company called real networks that had a company called uh rapity and rapity was actually the first ever streaming music service in 2001 before Spotify so then the Napster brand went on top of rap CID and uh kind of the business was born so we were before Spotify we were the oldest running streaming service so we're Napster by name but kind of rapy by Nature so the streaming era for the last 20 years there hasn't been a lot of innovation right so you have access to the music 100 million tracks you pay x amount per month but nothing has really changed apart from going from $9.99 to $10.99 so the feeling is that all of us in the web3 industry and US worky and media we feel that the web 3 era is now ready to bring the next act for the music industry streaming industry is starting to go into decline um Emerging Markets have a little bit more growth there's 5 seven years maybe to run in the streaming business but the business needs to be reinvigorated and we feel the time is we three ideologically uh it's about ownership artists are ready to connect directly with their fans they don't want to be held prisoner by platforms social media streaming Etc and the fans want to connect directly with the artist so they want to have more than just uh listening to the music so I used to work at a company called Roblox and at ROBLOX we did all these virtual concerts and fans could connect directly we made hundreds of millions of dollars for the artists in the music industry and people would hang out together so this new era we feel is ready to be unlocked so you know why now right are the artists ready like 20 years ago the business was early with digital but now all the artists you may read online that streaming doesn't make us enough money and you have a million streams and gets me $4,000 right so the the streaming model has some challenges so artists are very very excited to embrace this new era they thought that gaming and fitness were going to unlock this new revenue for for their industry we did a bunch when I was in gaming unfortunately after the pandemic companies like pelaton Etc didn't didn't prove to deliver that success and revenue so they're all very motivated to have something new labels artists Etc they want to connect directly it's really fun for an artist to connect directly with their fans they love that interaction and they can also start to make money beyond the subscription so fandom is not limited by $10.99 per month uh the artist can maybe offer digital goods and sell digital Goods to their fans directly or have experiences that they can do um with them so from an investment perspective that the web 3 music space has been dramatically underinvested in Visa gaming so gaming has taken billions of dollars per year in investment uh into companies like um sandbox and mythical etc etc so a lot of the money has been invested in gaming not a lot in um music so we think the Innovation is great but unfortunately not enough money in music so that presents an opportunity so we feel again that if you're a gaming company and you want to get popular with all your fans you have to build a brand then you have to de you know develop a fan base the great thing about music is that we already have millions of Brands supporting us and those are artists and bands and each of those artists and bands have hundreds to millions of followers so hence in the old days when the internet was going uh in its early years music was the on-ramp to bring all of this onto the internet you know we really feel that the opportunity now both from an investment perspective and a user adoption uh perspective music can be that unlock as regular fans and artists start coming onto the platform so that puts a company like Napster in this nice goldilock situation where we're not too big and we're not too small so on the right hand side companies like Spotify um they built their platform around what they're calling audio so they're kind of moving away from music and uh they're focusing on higher margin products they're kind of leaving leaving the music behind they're very big the product road map is for years ahead so very difficult for them to change and the web 3 startups on the on the other side great Innovation but due to the other slide haven't taken enough money unfortunately to be able to see it through and a lot of those we feel are more like features it's very difficult to do stuff without the rights so Napster has all the same rights as Spotify we have users etc etc so we're in this nice Middle Ground where we've started acquiring some companies in the web3 music space we're looking to acquire some more to really start this New Era of the business in terms of the product road map so again for those of you who uh who have never used Napster in fact who who used Napster back in the day to show up hands that's pretty good pretty good I'll give one of you a t-shirt we have T-shirts we got our merch today but yeah so Napster was a big thing right we had 85 million people in 1999 AOL had like 20 million so we we were like the internet uh there was only 3 million websites so naps was a big thing we have all these users around the world that love the brand I go from New York to Dubai to Singapore and people want to take pictures not because of me just a T-shirt and a Napster so there's a lot of brand love we have the same rights again as Spotify so very difficult to replicate same music uh very similar and then we have this Global user base who've been with us for a long time again because we were the the grandfather if you like of Spotify so this is the notion of kind of web 2.

5 so we're not fully web 3 we have an existing business and then we can build these new features on top uh as well so the the prospect that we're we're suggesting for music right now again not a very exciting proposition you go on to the service you can listen to whatever you can listen to It's a certain price for month not very Dynamic you you don't expect to go on to Spotify and connect with fans or connect with artists directly where we think there's an opportunity is to break down the wall between the artist and the fan so if you go onto the platform you would expect to see maybe Taylor Swift hanging out or one of your friends hanging out that they're doing live performances their digital Goods it's a little bit more like the company I worked at before Roblox right where it's more of this community Napster will build it be building a platform that will have tools for creators and curators to build on uh both digital goods and digital experiences and then as we go through the uh the life cycle we think we can also get to this co-creator era of the music industry where music has become atomized you've heard about Ai and remixing and and stems and all this kind of thing so with photos we've had Instagram with video we've had Tik Tok but music has never had that Music Moment uh yet so we feel it's a great opportunity to fans to with AI and remixing to kind of do their own versions of songs and I did a remix app 12 years years ago called Romer we went to number one in the App Store still one of the things I'm most proud of building so super super fun when you can kind of become a Creator or an artist yourself in music and it's all going to be very possible very soon and philosophically I think the the traditional web 3 I was the metaverse side of web 3 and we were making hundreds of millions of dollars in the metaverse um but we were doing it with people paying real fans paying a dollar $3 $5 not with sort of fancy collectors playing thousands of dollars so we think that opportunity in um in web 3 for music again on the mainstreaming is real fans earning rewards paying small amounts or getting them for free by the artists or the labels so some small examples if anyone has ever felt oh I discovered I heard Billy Irish before she was popular or whoever it was right or or or Diplo or the DJ No One Believes you right so now with things like fan tokens as you go on the Napster service your profile will start lighting up like a Christmas tree as you can see all the different fans you've been supporting over the years um you can then have a relationship maybe with the artist when you go to a live show um they can recognize that one of their top 100 fans is there maybe you get to do a meet and greet you get some goodies Etc digital Goods physical Goods we're a strong believer we haven't got time to talk today about playlisting so everyone has anyone ever made a playlist does anyone think they have good taste of music right so all of those playlists are locked Within These traditional Services we think there's a lot of value to be unlocked we filed some patents around playlisting to allow you to own your playlist and maybe generate money from them as a curator and then fan clubs obviously we all like getting back together in terms of uh clicks of music that we like that's how people uh connect with each other in the real world so this whole new movement if you think of I don't know burning man right with all these if anyone's been to burning man right you have all these camps right so Napster in the future can be like a digital plier and we call these decentralized music collectives So within that there's a label Collective a brand Collective playlist Collective or artist Collective these are whatever you associate your taste with you can connect with these collectives uh you can maybe listen to music from that Collective you can connect with other fans in that Collective but it's not about centralized control where it's only rap caviar and one playlist and all the top playlists are done by the platform you're connecting with these groups of people if it's a radio station radio one Diplo whoever it happens to be and and we give them the tools to exist on the platform and build their business so it's a whole new era again around super fans um around uh around around artists and these different curatorial groups so an example here there's a great artist called Blondell right so if I'm connecting with the artist she has tools to have social tools connecting with her fans there are there's going to be a Napster token in 2024 and um people will be able to kind of stake if you like the the napsa token to get blond shell to get into that community and so if you can connect early you have a way to support the artist you can kind of prove that you're part of that Collective and as they become popular you kind of benefit with rewards and engagement and po potentially return in the community so um in summary as we're uh as we're bringing to a close uh it really feels like as we've been talking about music is going to be the unlock all of us have heard about you know lay ones and this lay one and that one and then everyone's you know branching off ethereum and doing lay twos Etc a lot of infrastructure eventually we need something more than like friend. Tech right in terms of a consumer adoption we need something really visceral and exciting that everyone relates to and we think music is that Medium music is that opportunity we have the fans we have the artists so we generally think that music can be the unlock for Consumer uh Mass adoption of web 3 we talked about when so we think now is really good there's maybe a few years left to run on the traditional streaming industry everyone inside the business knows that that's happening so everyone now needs to work out what's coming next so everyone's very motivated labels Publishers artists venues Etc and fans the market opportunity is around this segment called uh super fans so Goldman Sachs and others have put that Market at around $4.5 billion um and that's about 30% of all music fans are the super fans and I was with the label executive the other day it's weird in any industry where you have a third of your fans going we want more and the industry doesn't know what to give them so there's this pent up demand from fans and an artists so our hypothesis is Napster hopefully can help with this unlock of uh of web 3 to rationalize and and justify the whole industry everything that's been invested um we have a great brand we have all these loyal users around the world that love the brand we have all the rights the same as the other platforms and we're ready to do something new and exciting so um we we'd encourage you if anyone is interested in music and has we're looking for Partnerships Etc uh artists and Technology Partnerships and it's a little treat for you guys we've just launched our uh first drop if you like as we're getting into our community so if you go to the cat isback doxyz have a chance to win one of our new ordinal drops that are happening and and that's going to be around the Napster Community that's launched around cats which is our part of our logo so anyway it's going to be fun it's going to be about Community it's not going to be boring like it is now like the electricity company so we're going to bring some excitement back to music hopefully um we look forward to working hopefully with some of you guys as partners or at least as consumers of the platform so uh that's it thanks very much for having [Applause] me