Welcome to the Block & Mortar newsletter! Every week, I bring you the top stories and my analysis on where business meets web3: blockchain, cryptocurrencies, NFTs, and metaverse. Brought to you by Q McCallum.

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Taking on royalty

Real talk: does anybody actually like Ticketmaster?

At best, they’re Just Some Company You Use To Buy Tickets. At worst – which is “most of the time” – they’re a textbook case of the middleman gone astray. This (alleged!) monopoly keeps tacking on nonsense fees just to see how much pain consumers will bear, like if a rogue Stanley Milgram social experiment explored price discovery.

All of which leads you to assign them not-so-creative-yet-still-somewhat-satisfying nicknames, like “TicketBastard.” (That’s the only one that was printable. Please subscribe to Block & Mortar: After Dark to see the rest.)

It takes a special company to botch Taylor Swift ticket sales so badly that it winds up in a congressional hearing , catch the ire of The Cure just a few months after, and then somehow … keep going? Why do people keep buying from Ticketmaster? (Aside from, you know, “they’re impossible to avoid, in no small part because of their merger with Live Nation and their ownership of so many US event venues?”)

It’s time for something new.

Sports Illustrated has entered the chat:

The company’s ticketing site SI Tickets is partnering with web3 development firm ConsenSys to launch a service called “Box Office” that includes an NFT ticket solution to let event hosts offer collectibles and loyalty benefits.

It could also upend the way tickets are resold on secondary markets and give event hosts a bigger portion of profits that typically go to scalpers or primary issuers, depending on the resale platform. The company’s website says the service can be as much as 50% cheaper than current competition, and it also highlights the promise of increased revenue by “monetizing every resale of your tickets.”

Very nice.

But as a wise man once said: “When you come at the king, you best not miss.” Sports Illustrated is not the first company to try to take on Ticketmaster. And the odds are, for the moment, not in the upstart’s favor.

Then again, Sports Illustrated has strong brand recognition out of the gate. That should help them overcome the dreaded discovery problem that makes it harder for new services to get traction. Plus, the way they’re using web3 technology should enhance attendee engagement and security of sales on the secondary market.

We’ll see where this goes.

One way to stand out from the crowd

Auction house giant Sotheby’s is getting into the NFT marketplace game. The scrolling words in the announcement video describe it as the “Premier artist-first platform, Curated by Esteemed Sotheby’s Specialists.”

One line stood out:

Artist Resale Royalties Honored

Hmmm.

This is likely a dig at OpenSea and other marketplaces that chose to ignore the artists’ stated royalty fees. OpenSea quickly made an about-face on that decision but the public relations damage had already been done. It’ll be a long time before the accusations of greed fall off the first page of search results.

The take-away lesson here is that sometimes, just sometimes, a new entrant can make their name simply by declaring “hey I’m not as bad as the others.”

If you got it, flaunt it? Maybe?

You can see for yourself. Head over to metaverse.sothebys.com to learn more.

Careful you don’t trip over that bar

You may remember the name David Z. Morris from last month’s media roundup. He’s the host of the Crypto Crooks podcast, which devoted five episodes to the story of Do Kwon and the Terra/Luna collapse. (Along the way he set some key quotes to a beat – check it out.)

Morris would now like to issue an apology.

Oh, not to Do Kwon. No no no.

To Coinbase CEO Brian Armstrong.

Remember what I said earlier, about standing out simply by not being terrible? Morris’s apology is essentially an ode to Coinbase not being a crime-ridden hellhole:

The times when, for instance, CEO Brian Armstrong didn’t secretly send my money to an affiliated hedge fund. Or the time he didn’t gamble my funds away on his own exchange, then go to India and die in possession of the only keys to what was left over. Or the time he didn’t lie about Coinbase’s finances. Or the time his entire system didn’t collapse and he didn’t flee to Serbia.

In short, whatever the missteps as Coinbase found its way, Brian Armstrong never stole from me. That should be a very low bar, but apparently not.

Why is Morris saying all of this now? Well, the SEC is sharpening its regulation of the crypto field. Coinbase is caught in the middle of the Are Tokens Securities Or Are They Not debate. To Morris’s point, part of this feels odd since Coinbase has gone out of its way to play by the rules:

Armstrong had previously touted photos of his frequent trips to the US capital to meet with regulators and lawmakers. Coinbase also cast itself as a company eager to play by the book, illustrated by its licenses from New York and dozens of other states. In 2022 it acquired a derivatives exchange regulated by Commodity Futures Trading Commission.

Which might be precisely why the SEC is feeling edgy. Remember the last time the head of a crypto exchange leaned hard into the We’re The Good Guys™ image? That was just a smokescreen to cover FTX CEO Sam Bankman-Fried’s (alleged!) massive fraud, to the tune of $10B in “missing” customer funds. The fallout from which triggered widespread damage across the crypto ecosystem. And will no doubt launch the careers of several documentarians.

So in the eyes of the SEC, maybe Coinbase looks a little too clean. And when everyone else around you is covered in dirt, being clean is a liability.

Trimming out excess reality

You know how that one, tiny gap in the hotel blackout curtains lets in too much sunlight? When it comes to visiting a metaverse property, your standard keyboard-and-screen setup lets in too much of the real world. You’re constantly reminded that, yes, you’re still in your living room.

A VR headset can provide a less leaky experience. (At least, until the batteries run out.) For metaverse properties that support it, here are three ways a proper VR setup can improve your travels:

1/ The casual hang-out. Here, your VR headset is a door to another world that is pretty much like this one. Travel is a snap and you can meet people from all over the world … in pixelated versions of everyday spaces. Like bars or comedy clubs.

This option is more popular than you might imagine. Remember when New York Times reporter Kashmir Hill toured Horizon Worlds a few months back? She ran into some real fans of digital living:

“I sleep in my [VR] headset,” said Sam […]. “Imagine waking up in the most amazing place in the universe.”

I thought she was kidding, but she insisted that she was serious. “What does your bedroom look like? Is it where you want to live the rest of your life?” she asked.

I told her I liked my bedroom. She persisted: “That’s where you want to die?”

I can’t imagine what a death-worthy room would look like. Nor would I find that a particularly interesting idea to explore with a stranger in a virtual bar. But that’s just me.

2/ Gaming. Video games have a long history of challenging your computer hardware. The right game will also challenge your sense of reality. Considering how horror movies already prey on your senses, what happens when you move from passive viewer to active participant?

“The sense of perceptual self-involvement provided by VR media is ideal for conveying survival horror fictions precisely because of how it leaves the player helpless within a threatening world,” [philosopher Grant] Tavinor writes. “‘What was that sound? Are there monsters back there?! I really hope there aren’t monsters back there!’ Of course, it usually turns out that there are monsters back there.”

It’s madness to choose to scare the living daylights out of yourself, no? But often where there’s madness, there’s method: some fans of the horror movie genre see it as a safe way to explore danger, so their brains can work out how they would handle similar situations in the real world.

Going from a movie (where you can only watch events unfold) to video game (where you have the ability to influence events) takes that up a level.

(Hat tip to horror aficionado John Tolva for the link to that paper and his accompanying explanation. If horror movies are your thing, be sure to check out his newsletter, Gravid With Decay.)

3/ In-person events. Just because you can travel a VR world from your living room, no law says that you must. The idea behind Sandbox VR (not to be confused with The Sandbox Game metaverse property) is “an in-person, virtual activity”:

“We decided to do this because we saw that this was one of the rare examples of technology bringing people together,” [co-founder Andy] Scanlon says. [He and co-founder Jake Wilmot-Sitwell] believe that games like theirs also provide a useful dividing line between the real and virtual world thanks to the one-hour time limit, during which gamers can choose from a variety of experiences including slaying monsters, fighting in a boxing ring or a Star Trek-themed adventure. People can experience the excitement of the virtual world, while also being able to unplug from it easily when the game is over.

Fair enough. This sounds like a blend of escape rooms and old-school video arcades. Hopefully it won’t be misused as a venue for corporate Mandatory Fun.

While describing the company, Wilmot-Sitwell raised an interesting question:

“Do you want people to be in a metaverse for eight hours a day? What’s that going to do physically and mentally to people, and economically, if you have hundreds of thousands of people, maybe more, doing that every day?”

I can’t say for sure. But when I consider the impact of millions of people scrolling TikTok 24/7 … well …

The wrap-up

This was an issue of Block & Mortar.

Who’s behind Block & Mortar? I'm Q McCallum. I've spent the past two decades in the emerging-tech space. And I'm very interested in web3 use cases.

Credit where it's due. Big thanks to Shane Glynn for reviewing early drafts. Any mistakes that remain are mine.

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