MelodyVR snaps up 'original music industry disruptor' Napster for $70m

A British tech start-up today made a surprise $70 million swoop for the music streaming platform which turned the industry on its head, Napster.

London-listed VR specialist MelodyVR is to take over Rhapsody International, which trades as Napster and is currently owned by Nasdaq-listed RealNetworks.

Napster made its name as an illegal music downloading platform after its launch in 1999 but has since moved to a model offering licensed tracks to both consumers and other businesses.

MelodyVR specialises in filming and streaming gigs on virtual reality headsets, with users paying via its app. The company plans to bring Napster’s catalogue of 90 million tracks on to its app to become a one-stop-shop for superfans of artists. Initially the pair will continue to operate as independent businesses.

MelodyVR’s shares saw a surge when lockdown began and consumers’ thirst for at-home entertainment stepped up. Today they sit at 4.4p, valuing the company, which hosts gigs from the likes of Emeli Sande and Liam Payne, around £76 million, although the shares are now suspended pending the publication of an admission document due by late November. It has capitalised on the absence of live music by streaming a host of concerts from Los Angeles, including shows from Cypress Hill, Kesha and John Legend.

Last year Napster notched up 10.8 billion streams and revenues of $113 million in 2019. Today's deal, a reverse takeover, is a fascinating twist in Napster's chequered history.

The peer-to-peer downloading platform set up by two teenagers allowed users to upload and download MP3s videos and files. Napster was forced to liquidate its assets in 2002 following a string of lawsuits including from high profile artists Metallica and Dr Dre.

The brand and its logos were bought out of bankruptcy by Roxio, and Napster was later bought by US electronics retailer Best Buy for £121 million. It later merged with Rhapsody.

MelodyVR chief executive 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.”