About two years before a recording of Marshmello took to a pixelated stage in Fortnite to make untold millions of dollars in virtual merchandise sales and usher in a new era of digital entertainment, the Los Angeles-based startup Wave brought DJs into virtual reality to play shows for audiences around the world.
At the time, the company’s mission to bring artists to larger audiences through technology and virtual worlds seemed like a letter from the future — a playground for avant-garde visual artists and musicians. Now, as artists dependent on live concerts and shows for their livelihoods struggle with how to be entertainers in a world where they can’t perform in front of their audiences, events like Fortnite’s communal viewing parties, or the Wave’s live concerts in virtual venues seem like a part of entertainment’s vital present.
The proof is in the growing roster of talent that’s flocking to perform in the Wave’s virtual spaces (which can be streamed on YouTube, Twitch, and Facebook — along with other digital and gaming channels, and through the Wave app available for Steam and Oculus) and the clamoring from musicians to reach Fortnite’s virtual stage.
In late April, the Wave announced partnerships with Warner Music Group and Jay Z’s Roc Nation to produce concerts with their rosters of talent — another indication of the industry’s embrace. A rumored partnership with a large social gaming platform is also in the works as is a concert with the Emmy, Grammy, Oscar, and Tony award-winning artist and producer John Legend (as part of the company’s One Wave series of events).
It’s also in the millions of dollars that Wave has raised from venture capital investors willing to finance its vision of augmented entertainment — including a $30 million round of funding that closed before COVID-19 pushed more musicians to consider riding along on Wave’s vision of a virtual future.
Live-streamed entertainment in virtual venues represents a new source of cash for musicians and their labels and a new onramp for users into the metaverses created by massively multiplayer online games like Roblox, Fortnite, and Minecraft. It’s a potentially highly lucrative piece of virtual commercial business sitting at the intersection of several trends accelerated by social changes the world’s response to the COVID-19 pandemic has wrought.
“COVID-19 has pulled the far future into the near future far faster,” said David Wu, a general partner at Maveron, the investment firm that led the Wave’s most recent financing. “[But] we committed to this investment even before that.”
The entertainment world was already moving to embrace the vision the Wave promoted, and investors including Maveron, and firms like Griffin Gaming Partners, RRE Ventures, Upfront Ventures, had all signed on to back the company in early March, before the pandemic pushed entertainers to embrace their virtual futures.
“People recognized the importance of Wave and the virtual concert experience before the pandemic hit,” said Phil Sanderson, a co-founder of the investment firm Griffin Gaming Partners and an investor in the gaming communication platform, Discord.
“[Musicians and concert promoters] all recognize the problem that they can only reach a certain number of people and the industry doesn’t scale the way it has been,” said Sanderson. “The ability to reach 100 plus times as many people in an interactive way is a natural extension of live performances… That’s the future of music. I’d been looking for that company and Wave is that company.”
Individual investors including the music impresario Scooter Braun, baseball allstar and business mogul Alex Rodriguez, and Twitch co-founder Kevin Lin are also backing Wave.
“I want to work with today’s most forward-thinking leaders in music and technology,” said Scooter Braun, who manages artists such as Ariana Grande and Justin Bieber, in a statement. “The future of the industry depends on it. Adam and his team at Wave are bridging these two very important industries to create transformative experiences for the next generation of concert-goers, with a refreshingly artist-first approach.”
“All artists will be able to use our platform”
The commitment to putting artists first is embedded into the Wave and has been part of the company’s DNA since its earliest days experimenting with virtual reality.
“We’ve been working hard to develop a community that’s both positive and inclusive, where all are welcome. Soon artists will be able to use our platform to reach all their fans at once, and these physical, man-made boundaries won’t have so much power,” said Wave co-founder Aaron Lemke in a statement about an earlier concert the company had produced for the Iranian-born DJ Ash Koosha.
To date, the company has hosted more than 50 Wave events for a number of popstars, DJs and artists including Tinashe, Imogen Heap, REZZ, Galantis, Jean-Michel Jarre and Lindsey Stirling, the company said in a statement. Its shows have reached audiences of up to 400,000 people.
Lemke and his co-founder Adam Arrigo (a friend from the Los Angeles startup community), have worked at the crossroads of music and gaming for nearly a decade as designers and developers of apps and games including the Rock Band series and Dance Central series.
Arrigo said that Wave could function as a discovery engine for new music and a way for artists to reach a broader set of their fanbase. It’s not oppositional to the traditional music industry, he stressed, it’s an evolution of that industry into a new medium.
“We started the company with the sole purpose of helping to make artists money,” Arrigo said. “We come at it from the musician standpoint because we are musicians.”
So are some of the company’s investors. Wu, who spent the better part of a decade playing bass in the now-defunct (and digitally non-existent) band Occam’s Razor before becoming a venture capitalist, spent years playing between 250 and 300 live shows. He’d been looking for a way to invest in the convergence of gaming, entertainment and streaming as an investor, but hadn’t found the right company… until Wave.
From the initial meeting in 2016 until the investment earlier this year, Wu said he tracked the company’s progress. And while its initial, virtual reality-focused efforts felt too tied to a platform that hadn’t seen user adoption, its evolution across platforms and (hypothetically) into multiplayer gaming environments was too compelling to pass up.
“The technology of avatars can build an experience and have the high production value and live experience of a live show,” said Wu. “Wave was a step ahead into the future and the beginning of what’s possible.”
Virtual concerts make real dollars
Businesses like Wave make money in three major ways: sales of virtual merchandise, brand sponsorships, and in app purchases including gift sharing, according to Arrigo.
It’s a model that’s proven to be successful in Fortnite. While Epic Games, the company behind Fortnite, won’t disclose how much it made from its Marshmello and Travis Scott events within the game, industry observers speculate that the Marshmello show alone brought in roughly $30 million, with some saying that number was far higher — into the nine figures. The Travis Scott event was another multi-million dollar windfall for the artist and the company, according to industry insiders.
What differentiates Wave shows from things like Epic’s entertainments is that Wave shows are completely live, interactive events. And these concerts bring in attendees, several million people showed up for Travis Scott, while Wave had 400,000 viewers for its Lindsey Stirling concert, according to Arrigo.
“The economics work out hugely in our favor compared to a physical show,” said Arrigo. “With the scale of a virtual show you can have 3 million people show up and each person pays two dollars. The show production processes are a bit cheaper. [Artists] don’t have to pay the venue… [They] can reach more people. It’s actually cheaper for the audience and the artist makes more money than they would make for a physical show.”
Interactivity also creates the potential to up-sell viewers and attendees. The Wave has features for its virtual reality users that allow them to communicate and enter private virtual spaces where they can share unique visual experiences — Arrigo likens it to taking virtual drugs or having a virtual drink. There’s no reason why a venue couldn’t sell those experiences to concert-goers for a fee.
On the artist side,Wave has different tiers for musicians based on how much they can afford, and as part of the company’s latest funding round it’s investing in tools to make the creation of these virtual spaces even easier for artists who want to put on a basic Wave show. The money is also going to be used to expand the company’s footprint in China and Japan.
“I could totally see a model where in the future the physical performance has a hub where the show can come out of and it can be broadcast into a number of physical and virtual spaces,” said Arrigo. “The key is intimacy and interactivity.”