Audio-First #10: The Metaverse, Apple M&A, and Quarantine Diversions

  
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Welcome back audio nerds! I hope you’re well in these trying times. I also hope last time’s deep-dive on Brazilian music was fruitful. For me, it’s been very necessary to stay positive.

As the coronavirus went from Faraway Problem to Very Real Threat, things are no doubt profoundly weird. But there’s some comfort in the fact that it’s weird for everybody. That we’re all in this.

Most of us are lucky enough to be insulated from the real medical emergency, and the relative comfort is eerie in its own right. But you get accustomed to it fast. I mean, last night I ate dinner while in the bathtub. Meanwhile, I have friends working in NYC emergency rooms.

Compounding on this bizarreness is the sense of time-travel. If you’re young, this a peek into what life will be like retired. If you’re quarantining with a significant other, it’s like hitting fast-forward to marriage. And then there’s the looming pandemic, which feels like something History Book People agonized over, like Hades or scurvy. (A testament to human achievement, in a way.)

We’re living in one giant, collective anachronism. 

Closed for business

Audio-First has been slowly stumbling towards a Grand Unifying Theory of Media. I’m not there yet, but we previously reduced it to “mind control.” That’s effectively the game for creators: how desirable was your mind control? As the neuroeconomist Paul Zak notes, “A good story’s a good story from the brain’s perspective, whether it’s audio or video or text. It’s the same kind of activation in the brain.” 

Recently, hearing Gavin Baker talk about The Metaverse added a new layer of perspective:

“The metaverse is simply a series of connected virtual worlds I firmly believe the majority of people will spend a majority of their waking hours within my lifetime. Today, most of those worlds are called video games. And I would say The Metaverse being the culmination of the internet is a relatively accepted opinion amongst early-stage venture investors and large technology companies...as you see a DJ named Marshmello did a concert in Fortnite that 40M people watched. There's a special Star Wars event. There’s already events regularly in every video game. I’m more and more convinced that video games will be foundational to the metaverse. One signpost there is we have a lot of data on internet traffic. According to Verizon, Video Game traffic is up 100%. And Telecom Italia saw video game traffic up 75% and social media traffic up 0% because people are connecting through video games.”

The full picture here is that audio (and anything Audio-First) is part of an umbrella of media-tech that allows you to enter a virtual world. Listening to a podcast like Serial is quite a bit different than a persistent virtual world like Fortnite. But fundamentally, and neuroscientifically, they’re on the same spectrum. They compete for mindshare.

Now if you’ve read Snow Crash, you know there’s 3 different ways to access the proverbial Metaverse: high-quality home VR, grainy public arcade-style VR, or for the real addicts, a portable headset. (Eerily similar to what we have today). What attracted me to audio & audio-first tech is that the third portable option has seen a lot of momentum technologically–airpods, music streaming, podcasting, voice assistants, generative audio, conversational AI–these all seem to be converging on a compelling virtual world that’s portable. Sure, it’s not complete immersion like our home system. But it delivers something that only requires 70%-attention, allowing us to get a taste of the giant computer-storyteller-machine while going about our day. 

That’s why I wrote in edition #4 that the reason I’m ‘long’ audio is because I’m ‘long’ distracted consumption. There’s just a shocking amount of surface area unlocked.

With COVID-19, however, this is short-term a bad break for audio. Music streaming and podcasting and AirPods are built upon the assumption that people can consume on-the-go. Unsurprisingly, podcast listening is already down from the start of March. Similarly, musicians, who rely on tour income and second jobs to pay the bills, are very much affected. I suspect this will all rebound as normalcy returns, but this is a seriously bad demand shock. 

On the startup front, things are tricky for the time being. Smart guy and friend of the show Michael Dempsey wrote a great summary of why startup funding is still on hold right now. The demand shock, the asset-wide allocation, and general uncertainty has already affected the funding environment. Similarly, Chamath Palihapitiya highlighted on a must-listen pod that companies are now price takers, and said that founders can expect 30% haircuts. For now, the startup go-go days are on pause.

Finally, as I hinted in the last edition, COVID-19 is a likely boon for tech giants like Apple. Apple also has a massive balance sheet to make smart acquisitions. With much of the tech industry reeling from the fallout, Apple’s $200B cash-on-hand could buy a wild portfolio of services and hard tech (say sound-producing nanomaterials, h/t Dror Poleg). Already, it’s snapped up Dark Sky and NextVR in just 2 weeks. The NextVR acquisition, in particular, hints that Apple is taking this concept of metaverse extremely seriously.

Right now, the world is rife with predictions about what COVID will bring and how it will change our habits. Just by exposure during quarantine, there’s a good chance people see the digital world as “primary” more than ever. That could bring metaverses here even faster. Short term, though, it’s a bad break for audio. Quarantine is showing how audio’s edge is dependent on people being portable. Obviously, our ears aren’t going anywhere and we won’t be sheltering in place forever. So I remain optimistic. As it stands today, though, tech giants seem better positioned than ever.

Quarantine Diversions

What’s working for me is going deeper on my favorite artists, reading up on music history, and watching any remotely interesting documentary. We’re also living in a golden age of podcasts & docuseries, where I have some recs below. 

Read

Listen

  • A fairly well-known podcast hosted by Rick Rubin and Malcolm Gladwell called Broken Record has some of the most captivating music interviews I’ve ever heard. You can listen to Nile Rodgers talk about working with Madonna, Diana Ross, as well as a hilarious account of playing with Prince (my personal fav). I learned that Tyler The Creator vastly prefers Igor, and that he’s a ‘chord person’ far more than a ‘drum person.’ You can listen to Flea spill his guts, or hear Andre 3000 explain why he’s uninspired about releasing new music.

  • VCs - Chamath’s other interview with Kara Swisher was good. I’ve been enjoying Geoff Lewis’ video updates. Both investors predict a breakup of the EU due to Covid, interestingly.

  • Yves Tumor’s latest album (must-listen IMO)

Watch

Liner notes

Drake’s “Toosie Slide” Is a Master Class in Marketing, but Nothing Else. The creation myth of Kanye West. 

If you enjoyed this newsletter, forward it to a friend. If you didn’t, forward it to an enemy. 

Stay tuned and keep it locked,

Nick

NpappaG

PS - I’m doing an upcoming interview with an iOS developer about airpods, audio, and the future of Apple. You can submit questions and talking points here.

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