An interesting development in the convergence of concerts-at-home technology and recorded music streaming: UK-based virtual reality music company MelodyVR has acquired US-based Spotify rival Napster in a deal worth $70m.
Breaking down that $70m price tag is important.
According to an SEC filing from Napster’s previous majority-owner, RealNetworks, it comprises $15m in cash, $11m in Melody VR stock and “assumption by MelodyVR of approximately $44m in payment obligations, primarily to various music industry entities”.
So MelodyVR, which posted a £15m ($19m) net loss in calendar 2019 on revenues of £195k ($242k) , appears to have agreed to cover said payment obligations to record labels, music publishers etc.
According to RealNetworks, Napster started 2020 with over 3 million users across four continents, delivering over 90 million licensed tracks.
Napster acts as both a consumer-facing platform and a B2B / platform-as-a-service partner to businesses. The platform served 10.8 billion streams in 2019 with annual revenues of $113 million.
The MelodyVR acquisition is expected to close in the fourth quarter of 2020.
Calling the buyout a “landmark move”, MelodyVR says the combination of its platform with Napster will “establish the world’s first entertainment platform that spans immersive live performances and recorded music streaming”.
Adds MelodyVR, which has staged virtual concerts for the likes of Post Malone, John Legend and Khalid: “The combination of Napster’s massive library of audio tracks and MelodyVR’s catalogue of virtual live music shows – the largest in existence today – will offer users the deepest audio and visual music experience currently available.”
MelodyVR CEO Anthony Matchett said, “MelodyVR’s acquisition of Napster will result in the development of the first ever music entertainment platform which combines immersive visual content and music streaming. For music fans today, live and recorded music are intrinsically linked. 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 world’s foremost music experience, available seamlessly across audio and visual media and in turn presenting a truly next generation music service.”
Napster CEO Bill Patrizio commented: “This is a tremendous outcome for two organizations with complementary platforms and loyal audiences, and we could not be more excited to be moving forward as one company. 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.”
“Rhapsody and Napster have travelled a long and winding road,” said Rob Glaser, Chairman and CEO of RealNetworks and Chairman of Napster. “We first became involved with Rhapsody when we acquired Listen.com in 2003, and then Rhapsody acquired Napster in 2011.
“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.”
RealNetworks acquired the Rhapsody service in August of 2003. In 2010 Rhapsody began operating as an independent entity, rebranding itself in 2016 as Napster, followed by a pivot to the “Powered by Napster” B2B strategy, which focused on selling the Napster music Platform-as-a-Service.
