British virtual reality music business MelodyVR buys Napster in $70m deal

James Cook
·2 min read
MelodyVR has staged virtual concerts for musicians such as Post Malone - Getty Images Europe 
MelodyVR has staged virtual concerts for musicians such as Post Malone - Getty Images Europe

Napster, the US music business that pioneered internet file-sharing in 1999, has been snapped up by AIM-listed music business MelodyVR in a $70m (£53m) deal.

MelodyVR, which stages virtual concerts for musicians such as Post Malone, John Legend and Khalid, announced its purchase of the Napster music streaming service on Tuesday.

The UK virtual reality business plans to integrate Napster’s music streaming service with its virtual concert product, which lets fans watch shows through virtual reality headsets and their smartphones. The company saw streams of its concert library increase 56pc during lockdown.

Napster, founded by Shawn Fanning and Sean Parker, became an early internet sensation following its launch in 1999 for its peer-to-peer music download software, which saw the business accused of copyright infringement. The website is widely viewed as having set off a boom in digital music downloads before the launch of iTunes and ultimately streaming apps such as Spotify.

The peer-to-peer music download product was shut down following a court injunction in 2001. Prominent musicians including metal band Metallica and rapper Dr. Dre had launched suits against the service alleging that it illegally distributed their work.

Napster’s brand name has since been reused following the original company’s bankruptcy.

MelodyVR will pay $15m in cash for the business, along with $11m in its shares. It will also assume $44m of Napster’s payment obligations to the music industry as part of the transaction, which is expected to close at the end of the year.

Napster is now the brand name of the Rhapsody music streaming service, which allows customers to subscribe for a monthly fee in order to legally stream and download music.

RealNetworks, the seller of the Napster service which bought the brand in 2003, said in a legal filing in the US that the current Napster streaming service has more than 3 million customers.

Anthony Matchett, the chief executive of MelodyVR, said his purchase of “one of the music industry’s original disruptors” will allow his company to run the “first ever music entertainment platform which combines immersive visual content and music streaming.”