Napster, the file-sharing enterprise that devastated the music trade on the flip of the century, has been bought to UK know-how firm MelodyVR in a $70m deal.
The acquisition from US firm RealNetworks is the newest try to remodel the well-known tech growth model, which was co-founded in 1999 by digital pioneer Sean Parker, who went on to be an early Fb investor.
Having discovered fame as a web site that allowed thousands and thousands of individuals to share music illegally over the web, Napster was shut down in 2001 earlier than being resurrected as a streaming platform.
MelodyVR streams digital music concert events and occasions at the side of promoters together with Reside Nation. Chief government Anthony Matchett informed the Monetary Instances he was assured he might create a powerful participant within the music sector by combining its fledgling digital stay music enterprise with Napster’s streaming operation.
“This acquisition places us on a path to being worthwhile as a bunch fairly rapidly,” he mentioned.
The acquisition value contains $15m in money, $11m in MelodyVR shares and $44m in fee obligations to numerous music publishers and file labels. That historic debt seems to be a heavy burden for the lossmaking UK start-up, although Mr Matchett mentioned the obligations are “manageable”.
The corporate reported lower than £200,000 in income in 2019 when it recorded a £16.1m pre-tax loss, so the Napster deal represents a reverse takeover of the enterprise.
Throughout its heyday, Napster raised the ire of the music trade, with the heavy metallic band Metallica efficiently suing the corporate. The location’s closure proved to be a turning level for the sector, with its success triggering a pointy decline in CD gross sales and a shift in the direction of downloading music by way of Apple’s iTunes, and later streaming by means of authorized providers equivalent to Spotify.
Napster was relaunched as a obtain service to tackle iTunes and later transformed to a streaming platform that operates each beneath its personal model and as a service supplier to different corporations. It has constructed a base of 3m customers and a tune library of 90m items of music.
RealNetworks took management of Rhapsody, the guardian firm behind Napster, final 12 months. Earlier Napster traders embrace Greatest Purchase, the electronics retailer, and Spanish telecoms firm Telefónica.
Mr Matchell mentioned he remained assured there was room for smaller gamers within the streaming market regardless of the large scale of Spotify and Apple.
MelodyVR will elevate $15m by means of issuing new shares to fund the deal.