Napster is on the move, again. London-based virtual reality concerts company MelodyVR announced on Tuesday that it is acquiring Rhapsody International, which operates as Napster, from its majority owner RealNetworks for the price tag of $70 million.
MelodyVR, which operates an app specializing in live virtual reality music experiences, plans on combining with Napster to create the “first ever music entertainment platform which combines immersive visual content and music streaming,” said Anthony Matchett, MelodyVR’s CEO. The $70 million transaction is expected to close by year’s end and breaks down as $15 million in cash, $11 million in MelodyVR stock and the assumption of roughly $44 million in payments owed by Napster to various music industry entities.
“For music fans today, live and recorded music are intrinsically linked,” Matchett said. “We are as keen to see our favourite artists perform live as we are to listen to their albums. Our purchase of Napster, one of the music industry’s original disruptors, is born out of our wish to deliver the w orld’s foremost music experience, available seamlessly across audio and visual media and in turn presenting a truly next generation music service.
Though named after the consequential peer-to-peer file-sharing software launched in the late 1990s, the Napster that we now know is actually a descendant of the the pioneering on-demand music streaming service Rhapsody. RealNetworks acquired Rhapsody in 2003, with Rhapsody then buying the Napster name in 2011. In 2016, Rhapsody — which operates independently with its own board and leadership team — was rebranded as Napster, followed by a pivot away from direct-to-consumer streaming to its “Powered by Napster” B2B strategy.
With this shift, Napster’s business is now focused on delivering music streaming to users through business partners as a provider of platform-as-a-service (PaaS) and white label solutions to subscribers. The company says it began 2020 with 3 million users on four continents, delivering more than 90 million licensed tracks to consumers and its various partners. According to its latest quarterly report — via RealNetworks — Napster revenues ended June 30 down 18% (to $23.3 million) compared to same quarter of 2019 due to decreases in subscribers across its consumer and B2B disciplines.
Currently, RealNetworks holds 84% of Napster’s outstanding equity, thus giving it a majority voting interest.
“Rhapsody and Napster have travelled a long and winding road,” said Rob Glaser, chairman and CEO of RealNetworks and chairman of Napster. “We are proud of our stewardship of this pioneering business and iconic brand, and grateful for the hard work by the entire Napster team to keep the torch alive all of these years. We’re delighted to pass the baton to Anthony Matchett and the innovative team at MelodyVR. We’ll continue to root for Napster and are pleased that we’ll be ongoing stakeholders in MelodyVR’s success.”
Napster CEO Bill Patrizio said “the product, technology and cultural synergies of Napster and MelodyVR will bring tremendous innovation for music lovers, artists and the entire music industry. Good things come from being together, and we look forward to creating a powerful platform that combines our strengths and offers an even wider range of content to consumers, creators and advertisers.”
MelodyVR launched in 2018 after years of planning, billing itself as the only licensed VR music platform with the largest library of immersive and interactive music experiences. While the MelodyVR app is free to download on smartphones and VR headsets, users must pay for individual concerts and experiences. In July it reported its financial results for 2019, showing revenues at £195k and an operating loss of nearly £16 million.
