How much was the deal?
Napster was one of the first services that offer music streaming. It was the brainchild of Shawn Fanning when he linked computers to allow users in accessing each other’s mp3 audio files. The discovery triggered events that affected the music industry.
But the service was under threat.
Recently, MelodyVR, a British music tech startup, announced that it bought Napster for $70m. MelodyVR is a company that films and streams gigs that fans can watch using VR headsets.
The acquisition aims to create a platform that combines Napster’s technology.
In the 1990s, Napster was used to be a place where people can illegally download music.
By combining the two services, fans can enjoy watching immersive live performances. Currently, Napster has over 3 million users with a library of 90 million tracks.
What is MelodyVR?
It’s a British company that only started two years ago. The company hosted gigs by acts, such as Cypress Hill and The Chainsmokers. During the pandemic, the company managed to grow rapidly. Music lovers are looking for online entertainment while they are stuck at home as the live music industry is halted because of the pandemic.
The company has studios in LA and London. They allow artists to perform gigs and fans can watch through the app. To date, it managed to invite more than 100 artists to perform virtually.
The acquisition of Napster will help the British startup to develop a platform for the music entertainment industry that combines immersive visual content. The purchase is a result of the founders’ wishes to provide a next-generation music service.
MelodyVR is a publicly-traded company on the London Stock Exchange. Its cap is around $97 million. The deal will allow MelodyVR to pay $26.3 million to Napster’s vendors. The company will also issue 200 million shares. When the merger is complete, MelodyVR will be the sole owner of Napster.
In relation to the deal, trading in its shares has been temporarily suspended.
At first, the two companies will operate as separate businesses. However, in the long run, the two companies will be incorporated to provide immersive, live music, and music streaming services.
MelodyVR is in direct competition with other large streaming services, like Amazon and Spotify.
But MelodyVR isn’t the first buyer of Napster. In fact, it has become the third owner. When Napster filed for bankruptcy in 2002, Roxio stepped in and re-launched it as a legal business. Laster on, Best Buy bought Napster in 2008 for $121 million.
Then, in 2011, Best Buy sold it to Rhapsody. The company adopted the name in 2016.
The acquisition of Napster could somehow alleviate the weight of RealNetwork’s bottom line. It allows the company to focus on areas where it can grow, like facial recognition technology and games.
Napster posted an operating loss of over $2 million. MelodyVR’s acquisition of the service may revitalize Napster’s operation. The deal is said to close in the fourth quarter.
By combining the technologies of these two companies, music lovers and artists will have a powerful platform with a wide range of content.