MelodyVR has signed a $70m (£53m/€59m) deal to acquire Napster in an agreement designed to combine music streaming and live music virtual reality.
The British start-up, a subsidiary of EVR Holdings that allows users to experience live concerts and festivals in VR through the Oculus platform, has purchased Rhapsody International, which operates as Napster and is owned by Nasdaq-listed RealNetworks.
The Napster platform serves more than three million users across four continents and delivers more than 90 million licensed tracks to consumers and B2B partners. In 2019, it reported 10.8 billion streams and revenues of $113m, after almost 20 years as a legitimate business, which began life in the 1990s as an illegal downloading platform.
RealNetworks is to receive $26.3m, including a $15m cash payment and the remainder as 200 million MelodyVR shares, giving it a stake of about 11.5% in the business.
The rest of the $70m deal, which is expected to close in the fourth quarter of 2020, involves MelodyVR taking on $44m in future payment obligations to music companies and other partners that are on Napster’s books.
For the time being, Napster and MelodyVR will continue to operate as independent businesses. Napster’s library of audio tracks and MelodyVR’s catalogue of virtual live music shows, which it claims to be the largest in existence today, will offer users an extensive audio and visual music experience.
Anthony Matchett, chief executive of MelodyVR, 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.
“Our purchase of Napster, one of the music industry’s original disrupters, is born out of a wish to present a truly next-generation music service.”
MelodyVR, which has hosted gigs by acts including Emeli Sandé, The Chainsmokers and Cypress Hill, has benefited from COVID-19 turning fans towards digital and virtual entertainment as the live music industry ground to a halt.
The company set up safe studios in London and Los Angeles to enable artists to perform gigs, with fans paying to watch via its app. It has had 100 artists perform virtual reality gigs to date.
Napster chief executive Bill Patrizio said: “This is a tremendous outcome for two organisations 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.”
MelodyVR, which kicked off in 2018, has collaborated with ABC’s Good Morning America, Live Nation and O2 Telefonica – as its exclusive 5G launch partner.