The metaverse promises to open a world of new possibilities, applications, and business models, and along with these new ways of working, socializing, and entertaining ourselves come a host of legal questions. Music is poised to become one of the metaverse’s most fertile grounds for both creativity and litigation. While, like the metaverse itself, issues surrounding music production, performance, licensing, and other areas are still unfolding, it is time to start thinking about how music will “work” in a metaverse environment.
Few have thought about the intersection of music with the metaverse, leaving the area—especially in a legal intellectual property rights context—a mystery to many. Copyright, trademark, contract law, right of publicity, and other civil legal issues have been applied to music production and performance in the physical world for decades. Still, laws concerning music in an alternate realm and optimal strategies for performers, distributors, labels, venues, and other stakeholders will depend on how society answers a few basic questions:
- How will people use music in the metaverse?
- What are the likely new sources of revenue from music in the metaverse?
- Can “real world” laws be applied, or do we need brand new laws for the metaverse?
- What are the key issues metaverse companies and emerging technology platforms need to know about music rights over the metaverse?
- How will music rights be protected, laws enforced, and bad actors caught and penalized?
Some of these issues are more easily understood, while others are not. For instance, it is likely that music lovers will enjoy their favorite songs in the metaverse in several ways—by attending virtual concerts, subscribing to streaming applications or ad-supported metaverse radio stations, and purchasing and downloading music. But the metaverse also enables more interactive and intimate encounters with music and artists, from exclusive small-venue or “unplugged” shows to Q&A sessions and contests.
This gives rise to several new potential revenue sources. Blockchain technologies in the metaverse may allow for more efficient administration and tracking, reducing transaction costs and cutting out agents, brokers, and other “middle people,” lowering prices and rewarding the creative people behind the music. Another potential revenue source might be converting older musical formats for use in the metaverse. For example, creating metaverse concerts from old footage and remastering music for use in metaverse games and venues could become substantial new businesses. The good news is that existing laws can likely be adapted to the casual enjoyment of music by individuals in the metaverse. The need to define additional artistic and performance rights for the metaverse is probably unnecessary since it is essentially the same rights, just applied to a new medium and format. In fact, a new bundle of rights specifically for this new technology would create an additional, redundant layer of complexity. Nonetheless, industry and government will need to find a way to regulate music ’s use in the metaverse because, regardless of the locale, intellectual property rights must be protected.
- Rights Clearance – As in the physical world, determining who holds the right to use and profit from musical creations, performances, streams, and sales online will be a primary consideration in the metaverse. In most cases, traditional copyright and licensing rules used by today’s online music will apply. However, the proliferation of virtual music venues, derivations, technology, and applications within new, private, or even open online environments muddies an already murky and fragmented licensing process. The rights clearance issues posed by the metaverse are not very different from those posed in the real world, but the additional variables presented eliminate a cut-and-paste or one-size-fits-all approach. We see an environment beset with exceptions, concessions, negotiation, and compromise regarding metaverse music rights.
- Contracts – Musicians, their representatives, partners, and other individuals who upload music over the metaverse may be beholden to contractual commitments with third parties. For example, an artist might be expected to pay a certain percentage of the royalties earned before being allowed to use or upload a particular song to online platforms. Contracts may stipulate that intermediaries and internet service providers will be held liable for any secondary infringement of intellectual property rights that takes place in their realms. This could become a minefield for digital music, video games, virtual reality, and other companies operating in the metaverse. These companies and metaverse developers themselves need to be careful about any unauthorized use of music on their platforms. It is best to speak to a copyright attorney specializing in emerging technologies about the legal implications related to contracts and music rights in the metaverse.
- Royalties – So many new formats, venues, and applications may present difficulties for artists to keep track of royalty payments earned in the metaverse. Blockchain, NFTs, and crypto transfers may provide some relief by monitoring and recording how much is owed, by whom, and when payments are remitted. For example, by using blockchain technology, NFT platforms can record who owns a certain piece of music. The platforms can also keep track of the necessary royalty splits at the time when the NFT is minted. Additionally, artists, especially unsigned or independent artists, can take advantage of the blockchain and capture a bigger portion of their music revenue by issuing NFTs of their music themselves. So, blockchain technology and NFTs help artists and creators keep track of everything, including how much money they receive.
- Licensing – Existing licensing models appear too rigid to accommodate the possibilities promised by the metaverse, likely necessitating new laws or procedures to deal with the complexity. Licensing norms have not been fully developed or standardized for Web3. Experts are applying what they know about Web2 and previous digital iterations to determine how to streamline music licensing in the metaverse. It’s a sticky problem, aggravated by the fact that few musicians, end consumers, and start-ups fully understand how copyright law is implicated in Web3 or the creation of NFTs.
There are many challenges related to obtaining and granting a license to use music in the realm of the metaverse. Different stakeholders hold different views on who should be required to obtain a license, how compensation should be arranged, which rights should be conferred, and a myriad of other details. Performing rights organizations in the US and elsewhere believe the content provider (usually the streaming platform) should be responsible for clearing performance rights licenses. However, these issues are not so clear in a metaverse context, where the platform may be decentralized or an NFT holder may own the rights to publicly perform a certain song while others do not. IP enforcement may be difficult, which is why new procedures may be necessary for music licensing in the metaverse.
Blockchain technology and NFTs will increasingly play a role in artists’ ability to make money and control their rights, particularly for rising and independent artists. However, questions remain about how these rights will be operationalized, especially as complications arise in the swiftly evolving metaverse and Web3 space. Qualified legal advice can assure end consumers, metaverse service providers, and artists that their rights are guarded. It is best to seek the advice of a lawyer specializing in blockchain and metaverse issues before foraying into music in the metaverse.
Gamma Law is a San Francisco-based Web3 firm supporting select clients in complex and cutting-edge business sectors. We provide our clients with the legal counsel and representation they need to succeed in dynamic business environments, push the boundaries of innovation, and achieve their business objectives, both in the U.S. and internationally. Contact us today to discuss your business needs.