The Recording Academy, an organization of musicians, producers, and songwriters, was created in 1957 to honor excellence. It held the first Grammy Awards ceremony two years later. Among the first set of “Album of the Year” nominees in 1957? Frank Sinatra, Ella Fitzgerald, and Van Cliburn.
That first ceremony wasn’t even broadcast on television. In recent years, the Los Angeles-based organization has partnered with companies like Roblox, OneOf, and Meta to stay connected with music consumers and get exposure for the artists who make up its membership.
As part of our most recent research report, Shaping Your Strategy for Web3 and the Metaverse, sponsored by KPMG LLP, we spoke with Panos Panay, President of the Recording Academy, for insights on where the metaverse stands today; how the Academy has been embracing emerging technologies; and important considerations for working with partners.
Where is the metaverse? My view is that the metaverse is probably at the same place that the mid-1990s internet was.
I think people who are old enough will remember that in the early days of the internet, [it was a] virtual community. AOL had one; Apple had one — people may not remember it, but Apple had a community called eWorld. There was a series of players that presented a world where there was some ecommerce, some chatting, some gaming, some educational content, obviously media and entertainment content. At the time, it seemed very advanced, but looking back, it was pretty rudimentary.
There is a big gap between the promise [of the metaverse] and where it is right now — and that is not in any way to downplay it.
I feel that the metaverse right now is still very much at that stage. There [are] a number of people who are very curious about it. It probably takes up a disproportionate amount of media coverage, because of its promise. But I think there is a big gap between the promise and where it is right now — and that is not in any way to downplay it. It’s almost the opposite. I believe that in many ways, it will be as transformational [as the internet]. Both the metaverse and whatever we’re terming as Web3, I think these new technologies will be just as transformational as Web1.
Audiences are changing. The Academy is a 65-year-old organization. For 65 of those years, we’ve been primarily known about one activity, and that is the Grammy Awards. At the time, I like to say that the invention reflected the intention of the Academy, which was to use a stage to honor excellence and to celebrate it with the medium that was available at the time — and it happened to be broadcast television. That was the medium that aggregated the most amount of people, and therefore, the most important medium to use in order to create a metaphorical and literal literal stage to celebrate the people that its voting membership is awarding.
Fast forward to today. Obviously, audiences are fragmented and changing. A new generation of viewers and consumers is accessing content through different media. So our approach, in terms of architecting the next 65 years of this organization, is to dip our toe and experiment with different platforms, different technologies, different partnerships. It could be some version of a blockchain-based future world. … We have no idea.
We’ve taken the approach — since I joined last year as Co-President — that it is important for us to create partnerships and create experiences in these new [realms] as a means of learning and as a means of experimentation, because, to paraphrase Bob Iger from Disney, if you don’t go, you don’t know. And we want to go. So this year, we’ve gone to [the] gaming world with a partnership with Roblox; we’ve gone to the NFT space with a partnership with OneOf; we’ve gone into the blockchain space through a partnership with with Binance; and we’ve gone into the social space through a partnership with Meta, [using Facebook to push] content out into people’s newsfeeds in a very different way than we’ve done through the traditional broadcast means.
We’ve taken the approach that it is important for us to create partnerships and create experiences in these new [realms] as a means of learning and as a means of experimentation, because, to paraphrase Bob Iger from Disney, if you don’t go, you don’t know. And we want to go.
Partnership Outcomes. The results are just absolutely staggering. We’ve had over 140 million people access the same content that was on CBS the night before [the Grammy Awards broadcast] on Facebook. Our ratings for the TV show were less than one-tenth of that. About 10 million people watch the [Grammy Awards] show on broadcast television. We’ve had nearly three million people engage on Roblox with… meet and greets, and a concert by Camilo — with their avatar, not the artists themselves physically present. We issued limited-edition NFTs celebrating the artwork of the Grammys, through OneOf. We actually hosted screening parties on TikTok, where we had a number of TikTok influencers invite their followers to hang out with them. … Our view is that we want to experiment with these technologies. We want to reach audiences in different ways. And we think it’s the only means towards innovation — just trying things out.
Input from artists. [These collaborations are] a combination of us, and the platform partner, and the artists. Let’s face it — for Roblox, we wanted to get artists like Camilo who are also gamers — they love the platform. They’re going to be by far the most — not just engaged — but also the most likely to get results, precisely because they understand the medium.
With Facebook, of course, we talked with every one of the artists that performed on the [awards] show and their manager, as well as the labels. It was a multi-stakeholder partnership, because obviously, it involves rights, clearances, but also because these videos of the artists’ performances were posted on their own Facebook pages.
For me, it was a win-win-win scenario. … The labels won; the artists won; the Academy won; and our partner won. There’s always a close conversation and dialogue with the artists because our job, if you will, is to create these stages, but ultimately, our job is to help the artists shine, to help train a spotlight and shine a light on that talent. It’s not about shining a light on the Academy. … We approach ourselves as an organization that’s there to support and create opportunity for artists.
Value Alignment with Partners. I would say one [important part of working with partners] is value alignment. And in both [Roblox and OneOf], we felt that they understood music. That’s really important… For me, music is precious, it’s valuable. It should be handled like a precious artifact, to some degree. It’s important to society, and it needs to be handled with care.
We care a lot about reaching a new generation of music consumers that are not likely to turn on their TV; they may not even know what a TV is.
Audience Matters. The other [important consideration when working with partners] was clearly audiences. We can’t ignore the numbers. Roblox has over 40 million active daily users on the platform. Well over 250 million people every month collaborate on Roblox and create experiences and engage in experiences. We care a lot about reaching a new generation of music consumers that are not likely to turn on their TV; they may not even know what a TV is. They don’t even know what it means to wait for eight o’clock to [come] around to watch something on TV.
Externalities. We also care about the… externalities of a partnership — how it affects the broader ecosystem — and we care about the environment. So we believe that [OneOf’s] technology and the way that they’re minting NFTs is much more efficient and environmentally friendly than other NFT companies that use different blockchains, different algorithms to mint the NFTs.
All of these are important because the Academy and the Grammys is one of the world’s most recognizable brands. Truth be told, there’s not a place on this planet you’ll go where you’ll show that gramophone [trophy] and people don’t know what it is. It stands for something more than just the show, the same way that the five rings of the Olympics stand for something more than just an athletic event. It stands, I think, for certain aspirations that we have as humans. It’s about honor, it’s about excellence. … There’s so many award shows on the planet, but there’s not another Grammy. So we want to be associated with organizations that reflect those same values…
High Expectations Can Lead to Disappointment. For organizations dipping their toes into [emerging technologies], I think that if you put too much expectation on it, you’re bound to be disappointed. I know that people like to paint with a single brush all these technologies, but they’re very different and they are at very different stages. Are there enormous prospects for AR and VR and XR? Or is artificial intelligence going to fundamentally [change] the way that we go about engaging with music and discovering music? Is the metaverse going to be transformational? Will blockchain really unlock all kinds of remuneration possibilities for creators that did not exist at the beginning of this digital revolution? Yes. But they’re not all as advanced as they are going to be. I think too much expectation will only lead to disappointment, and perhaps, to people backing out of them prematurely.
For organizations dipping their toes into [emerging technologies], I think that if you put too much expectation on it, you’re bound to be disappointed. I know that people like to paint with a single brush all these technologies, but they’re very different and they are at very different stages.
Changing Market Conditions. We can’t confuse temporary market gyrations [in the price of cryptocurrencies and crypto-related stocks, which may be] reflecting multiple things. Mostly, the thing that they reflect is expectations of a return within a very finite period of time. [The prices are] effectively being seen as a definitive casting vote on the value of this technology, and I don’t even know if those very people that are trading those stocks are in any position to necessarily cast a vote or evaluate whether or not these technologies will be as transformational as they can be. … If you took a macro picture, a 10-year picture, then I would say that number one, those prices would probably be very different either up or down…
More importantly, I think that one needs to decouple the underlying financial valuation of technology companies, with ultimately how you should be evaluating the technologies themselves…. That’s sort of like saying, “The musical scale has no future just because a particular song sucks.” Somebody else with those exact same notes will create something totally different that’s significantly more timeless and more valuable than someone else. If technology is the scale, companies are just the notes. And then financial stock prices are just people saying “I like the song,” or, “I don’t like the song,” which is extremely subjective.