Mastercard's plan to bring music to the metaverse

According to Mastercard, the next big stage for the music industry is the metaverse.

Mastercard on Friday announced the Mastercard Artist Accelerator, which will connect artists with mentors and other technology experts to learn how to use Web 3.0, the metaverse and related technology. 

Financial services firms are still in the early stages of using Web 3.0, which broadly refers to development over decentralized networks; and the metaverse, an immersive internet experience which often makes use of virtual reality. While the Mastercard program is aimed at all demographics, the card brand sees the music business as an opportunity to gain insight into how it can apply the emerging innovation in the real world; and how it can potentially connect its bank issuers and merchants to young consumers.

"We do feel there will be an 'overweight usage' for younger consumers for sure," said Raja Rajamannar, chief marketing officer at Mastercard, predicting that overall adoption of Web 3.0 will initially be higher for younger audiences.

The accelerator is geared toward musicians, DJs, producers and related fields, and the card brand will provide instructions on how to use the digital economy. That includes lessons on minting nonfungible tokens (NFTs), representing themselves and their brands in virtual worlds and establishing a community inside Web 3.0. 

The program will start in the spring and culminate in a livestream artist showcase later this year. Mastercard is partnering with the Polygon blockchain to support the program. In materials accompanying the announcement, Polygon said the partnership is a step toward opening the benefits of Web 3.0 to a broader audience by educating new groups of users. 

"Many of these artists are good at what they do, but may not know a lot about building their presence on Web 3.0,"  Rajamannar said, adding the accelerator will also help musicians monetize their work. 

Mastercard's existing experience in the music industry includes sponsorships of music award programs, and earlier use of Web 3.0 to create virtual "experiences" for fans. 

The card brand in 2022 additionally partnered with Decentraland, a virtual world platform that supports a digital marketplace for users, to support Mastercard's involvement in Pride Month. 

These metaverse and Web 3.0 projects don't directly involve payment processing or selling items online, but there is an opportunity for Mastercard to play a role in developing the metaverse beyond the earliest adopters. That includes Gen Z and other young consumers that require a higher-tech approach from traditional financial service providers.  

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Other payment options are pursuing these demographics. Credit card alternatives such as buy now/pay later lending are attracting young consumers though the BNPL industry has faced economic and regulator pressure as of late. There are also crowdfunding platforms that are designed to connect musicians and other creators to payment rails. 

Mastercard is betting on its size to attract musicians, arguing it can provide a ready-made audience of consumers with card accounts. "We have a massive network with banks and merchants on each side," Rajamannar said, adding more than 2.2 billion consumers use Mastercard. 

To connect with consumers, Mastercard's new accelerator includes a music pass — an NFT that will provide card holders access to Web 3.0 music educational materials, and real-life and metaverse experiences. The NFT is designed for fans to join the platform and learn about the metaverse. 

"We're' trying to take the consumers on the journey along with the musicians," Rajamannar said. "That's the second side of this, to help fans discover new music and connect with the artists." 

Mastercard also contends musicians face a complicated mix of third parties that stand between artists and the public, which can be improved through the use of decentralized Web 3.0 technology connected to the card brand's services. "There are a ton of intermediaries in the music ecosystem and artists struggle to connect with fans," Rajamannar said. 

Other financial firms have recently ramped up Web 3.0 or metaverse programs. JPMorgan Chase has partnered with Decentraland to support a virtual world called Onyx, including a demo of how new payment technology works. HSBC has worked with gaming developer Animoca Brands to host games and other contests.

Visa recently launched a developer program for NFTs. And American Express has filed patent applications for technology that supports NFTs, virtual banking and virtual travel. 

Web 3.0 is part of a collection of emerging innovations, such as blockchain and NFTs, that are on Mastercard's radar and are at different stages of evolution, Rajamannar said. 

"We're looking for ways to solve pain points for artists and do it in a scalable way over the next 24 to 34 months," he said. 

There is an "incredible" opportunity for payment and fintech firms to handle transactions from within the Web 3.0 or decentralized infrastructure, said Sandy Fliderman, chief technology officer at Industry Fintech, a consultancy. 

"As more Web 3.0 technology comes online, there will be a race to become leaders in the space as now more people are in control over the technology, not specific companies or governments," Fliderman said. "This provides greater data security and eliminates centralized intermediaries."