Amazon Eyes 10 Figure NFL Media Investment, Multi-Million Dollar Digital Land Sales, and TikTok x Buzzfeed

December 2, 2021 by  wearerockwater

What We’re Reading

5 themes/ articles + RockWater analysis to make you a better investor and operator.

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Amazon Takes Lead in Talks for NFL Media Stake
Front Office Sports, 11.22.21

  • Amazon is in talks with the NFL about acquiring up to a 49% stake in NFL Network, RedZone, and NFL.com
  • The Amazon deal isn’t done and there are multiple media, private equity, and tech bidders seeking a piece of the NFL media empire

The RockWater Take by Andrew Cohen

Whether it’s Amazon, Private Equity, or another bidder, a 3rd party company purchasing a stake of the NFL’s media division would be monumental. The league opening up bidding for NFL represents the first opportunity that a 3rd party company would have to purchase a meaningful stake in a US sports league.

Given that Amazon is already paying $1 billion per year for exclusive rights to Thursday Night Football, and the rights for NFL’s Sunday Ticket package are projected to reach $2-3 billion per year, we expect even a minority investment in NFL Media to be valued well into the billions.

This is consistent with trends we’re tracking throughout the ecosystem: the exploding value of live sports rights, the buying spree for IP, and commerce brands like Amazon acquiring media assets to expand their “top-of-funnel” and drive more recurring revenue through Prime subscriptions.

 

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NFT Music Rights Startup Royal Banks $55 Million Investment Led by a16z Crypto
TechCrunch, 11.22.21

  • Royal partners with musicians and allows users to buy NFTs which represent collective ownership in works from those artists
  • Last month, Blau gave away hundreds of NFTs through the platform, which held 50% of the streaming rights to his latest song.
  • The startup says there have already been nearly $600,000 worth of secondary sales for those tokens, giving the new single an implied $6 million valuation

The RockWater Take by Michael Booth

There’s an emergent web 3 playbook that media companies are adopting which I’m defining as “X to Earn”. Having previously covered ‘P2E’ games unicorns like Axie Infinity and ‘W2E’ funds like Fox’s $100 million BCL catching investor attention, it is only fitting that the music industry feels the love with nascent ‘Listen to Earn’ (L2E) models.

For artists, releasing music via fan owned NFTs is a compelling alternative to the traditional record label model:

1. Audience Ownership – artists can closely incubate their “1,000 true fans” and tap them for crowdsourced financings on future projects. Think of this as the web 3 version of Tyler Perry’s 170,000 person email list back in 2003. Additionally, when fans own an artist’s content, they have all the reason in the world to be a huge word-of-mouth marketer.

2. Money – major record labels take ~80% of revenue, whereas NFT incubation lab / distributors like Royal are flipping that equation on its head by taking under 20%. Artists can also code royalties to secondary sales within NFT protocols, giving them an additional cut of the upside

Furthermore, record labels are great at deeply monetizing their top tier artists, but many up-and-comers on the mid card don’t get that same treatment. Investors like Hipgnosis have noticed and are rapidly buying back catalogs. Safe to say, artist / fan owned music won’t be relegated to a back closet where all long tail revenue goes to die.

3. Artistic Freedom – no need to conform to what a label exec thinks their sound should be. Remixes, for example, have become financially challenging for labels due to their complicated royalty structure. However, artists buying each other’s NFTs would align economic incentives such that remixes become tremendously more viable when the remixing artist also owns upside on the underlying asset being remixed.

As Casey Newton puts it, “The internet knows a vulnerable middleman when it sees one — ‘your margin is my opportunity’ and all that — and few middlemen look more vulnerable, from this perspective, than record labels.”

Successful activations like Blau’s will only fuel interest in ‘L2E’ models; expect we’ll see many more to come in 2022.

 

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TikTok Taps Buzzfeed to Produce the First Sponsored Weekly Live Shows on the Platform
Digiday, 11.23.21

  • BuzzFeed and TikTok signed a year-long deal in which BuzzFeed will premiere multiple live video series on the social media platform and TikTok will secure sponsors for the shows
  •  “I Made This” is the first series to come out of the deal coming from BuzzFeed’s cooking vertical Tasty

The RockWater Take by Alex Zirin

This deal represents a significant shift in TikTok’s strategy around content, bringing it closer to the types of ad-sales deals we’ve seen in the audio market. Clearly, BuzzFeed sees a great opportunity via TikTok’s 1+ billion DAUs and younger-skewing audience. From TikTok’s perspective, developing relationships with other media companies and content producers helps to bolster their offering and drive growth.

The article states that “BuzzFeed’s creator and talent teams are working with TikTok to create the shows’ content. ‘We are essentially the production: They own the partnership; we own the content.’” In practice, I think this is key to the success of these shows. TikTok certainly understands their audience and will have invaluable insights to bring to this process. BuzzFeed has had success on incumbent platforms like Facebook and YouTube, but they have room to improve here.

BuzzFeed and TikTok are both looking to answer a few key questions around content viewing habits on the platform, specifically in regards to “predictable audience behavior”. TikTok is a platform that lends itself to virality, and while predictability and virality aren’t necessarily mutually exclusive, they don’t exactly relate. In my view, as this partnership develops over the next year, it will be interesting to see what formats perform best, rather than the success of the partnership as a whole. Be it creator competitions, cooking shows, or talk formats, I’m eager to see what drives the most viewership.

 

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Multi-Million Dollar Digital Land Sales

The RockWater Take by Eric Kenigsberg

Who could’ve imagined that the next real estate boom would be in the metaverse? Sales of digital land over the past several weeks have been eye-popping but I’m here for the activations that we might see out of them in the future.

Last week, the record for a virtual real estate sale was set when a plot of land in Decentraland went for $2.4 million (before being beat just days later). As with physical real estate, the saying “location, location, location” still applies and in this case the plot of land purchased was in Decentraland’s fashion district. Fashion, uncoincidentally, has been and continues to be the most active vertical in the metaverse. Premium designer brands, such as Balenciaga and Gucci, have already made their forays into the metaverse, as have athletic brands including Nike and Adidas. This purchase of digital land has activation opportunities written all over it. I can already see it being developed for digitally-native fashion shows or pop-up shops in the future. Perhaps down the line, it will be a brand’s permanent home in the metaverse.

 

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How Roblox’s Virtual Brand Activations are Building a Robust Creator Economy
Digiday, 11.18.21

  • To create its in-game brand activations, Roblox often connects brand partners with developers working within the platform
  • Recently, some metaverse-minded brands have begun to skip the middleman of Roblox, partnering directly with the developers to bring their products into virtual spaces

The RockWater Take by Chris Erwin

The announcement that Roblox is allowing brands and marketers to interface directly with developers makes a lot of sense. It shows how Roblox leadership is smartly aligning itself with the “builder values” that win in the modern Creator Economy. And that is for platforms to empower and delight creators, and then reap the benefits from increased user engagement and audience building on your platform. Some key points:

  • Yes, Roblox might be missing out on near-term project fees. But Roblox wins when more partners create more awesome stuff within Roblox. And letting brands and developers rapidly partner up, and launch exciting new games and fan experiences, is the much bigger win. More content supply leads to more user time and engagement on platform, which leads to more in-game purchases. Which then gives brands and developers the funding and incentive to do even more cool stuff on platform. And Roblox participates the entire time. Win-win.
  • I agree that Roblox is likely overwhelmed with brand and partner interest, and thus currently supporting partners going direct to developers. Now that might change as Roblox staffs up its partnerships team, but I do hope, and recommend, that Roblox only act as an intermediary if they’re providing value to each of the brand and creator. Which they seem to have done to date, but what might that increasingly look like? Perhaps preferred campaign placement to improve user discovery of the collaboration, added customization on platform, introduction of other strategic partners to enhance the proposed collaboration, helpful guidance and learnings from past partnerships, on and off-platform marketing support, and more.
  • It’s exciting to think of the support layer that will increasingly be built for Roblox developers. Just like how YouTube birthed the first MCNs, which then inspired digital-first talent management companies, production tools, talent incubators…and which were all customized for each of the various social video platforms. We’ve seen the same thing happen for audio, livestream commerce, and newsletter writers. And now the metaverse will be one of the next largest frontiers for the growth of the next creator support layer!
  • I loved how NASCAR contributed sound assets for their collaboration with Roblox studio Badimo and the creation of a NASCAR vehicle in jailbreak. Speaks to how brand partners must be creative in thinking about the key identifiers of their brand (including audio cues and soundscapes) to create a unique experience for fans in virtual immersive worlds.

 

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If these insights are relevant to projects you are thinking through, ping us at hello@wearerockwater.com. We’re always excited to riff through ideas!

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