Metaverses are introducing ownership and rarity to the internet for the first time in its history. It is already generating billions of dollars in transactions, but the risk is that it becomes a club exclusively for the wealthy.
PARIS — Gas, electricity, paper… The prices of everything are soaring. But this is nothing compared with what is happening in the metaverse, a place of a multitude of new, virtual and immersive universes, populated with 3D avatars.
In The Sandbox, a metaverse launched in 2012 by two Frenchmen and backed by the Japanese conglomerate Softbank, the prices of virtual lands (more than 166,000 of them exist on the platform) compete with real estate prices in Paris, London or Hong Kong. A user called “EnzoFar” recently put his land for sale … for 66,666 Ethers (a top cryptocurrency, along with Bitcoin), or more than $227 million at the current exchange rate.
Others have done even better. Since their creation by four friends in 2021, the 10,000 unique virtual apes of the Bored Ape Yacht Club have generated what equates to $1.5 billion in transactions. Justin Bieber, Paris Hilton, Snoop Dogg and Eminem have all succumbed to the craze and bought their own.
Last year, one of the Apes sold for $3.4 million during a sale at Sotheby’s. So is metaverse nothing but a “club for the wealthy”, reserved for an elite of rich Internet users? At any rate, it has become Facebook’s (now Meta) and Microsoft’s new strategic priority.
The end of the free Internet
This question needs to be asked since the metaverse introduces two concepts which do not exist yet on the Internet: rarity and ownership. In the metaverse, users can play video games, participate in work meetings as avatars, visit a virtual museum, attend “concerts”. The Sims (2000) and Second Life (2003) can be considered as early forms of metaverses.
In today's metaverses, the novelty is the possibility of owning virtual goods, which can be bought or sold on platforms such as OpenSea. These goods are the infamous NFTs, the “non-fungible tokens”, they allow the certification of the ownership and uniqueness of virtual items.
Yet up to now on the Internet, ownership did not exist. “Skins”, which can be bought in the Fortnite video game to dress up characters, are specific to this game only and cannot be used anywhere else. In the same manner, Spotify users do not own any song: they pay access rights with a subscription. Google and Facebook are also experimenting with a subscription system, but remain largely free. Monetization is achieved through the exploitation of personal data and targeted advertising.
“The metaverse marks the end of the free Internet,'' says Joël Hazan, a BGC associate. “In the same way that we cannot access a museum for free in real life, this will not be possible either in the metaverse.”
Of course, all NFTs have not soared as much as the Bored Ape. In Decentraland, another metaverse created in 2015, the most common items to customize avatars — namely bunny ears or angel wings — are sold for a mana or less, which represents $2.81. Brands can also win their customers’ loyalty by offering them NFTs. But in general, entirely free experiences will be limited.
Attendee tries a Metaverse experience via VR technology at the Jump Studio at the Mobile World Congress
Signs from Fashion Week
“Nowadays, the metaverse is a club for the wealthy; it consumes a great deal of money,” says Luc Jodet. He is the co-founder of Arianee, a blockchain protocol that allows the authentication of luxury and fashion products. “The Bored Ape go hand-in-hand with the Lamborghini. For a whole lot of people, NFTs are a visible sign of wealth and not only a speculative product.”
It needs to appeal to the general public
The luxury world quickly understood the interest of the metaverse. For major companies, it means the opportunity to engage Gen Z, who spend more time playing video games than using social media. Last week, 70 brands from Dolce & Gabbana to Etro took part in the very first “Metaverse Fashion Week” on Decentraland. The program included avatar fashion shows, the launch of NFT collections and the opening of “shops”. Everything occurred in a “Fashion District” based on the real-life Avenue Montaigne in Paris.
“If the metaverse remains a club for the wealthy, it will not work. It needs to appeal to the general public,” says Arianee’s Luc Jodet. “Being able to own goods on the Internet is a major revolution; it would be a shame to limit it solely to a tiny percentage of the population who can buy NFTs.”
A better distribution of wealth in the metaverse would serve as a good campaign topic for the coming French presidential election. And perhaps as a new field for Brussels to regulate.
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