'No Better Name': Napster Acquired for $200 Million to 'Disrupt' the Metaverse Napster was once a file-sharing service that allowed users to download songs for free.
By Sherin Shibu Edited by Melissa Malamut
Key Takeaways
- Napster was founded in 1999 as a free service that enabled users to download MP3 files straight from their PCs.
- While Napster’s file-sharing service is no longer functional, the brand is still alive as a music streaming service — and it has just been acquired for $207 million.
- Under the acquisition, Napster artists will soon be able to create virtual reality environments and virtually host events.
Napster gained popularity over 25 years ago by allowing users to download MP3 songs for free. At its peak in February 2001, it had an estimated 80 million users.
After legal challenges, Napster shut down in July 2001. In 2016, it was reborn as a music streaming service that offered access to over 110 million songs for $11 per month and paid artists and songwriters over $1 billion in royalties.
Now, a new buyer aims to add another dimension to Napster, expanding it from a music streaming service to a virtual reality platform.
3D technology company Infinite Reality acquired Napster on Tuesday for $207 million. The acquisition positions Napster to become more than just a music streaming service — it can now also profit from the metaverse, the 3D digital space accessed through a virtual reality headset like the Meta Quest 3 or Apple Vision Pro.
Under the Napster name, Infinite Reality plans to create 3D spaces, or virtual rooms within the metaverse, where Napster artists can host virtual concerts or listening parties for their fans and virtually sell merchandise.
Infinite Reality, which is valued at $12.25 billion, was attracted to Napster's official licenses for millions of songs and its name.
"I think there's no better name than Napster to disrupt," Infinite Reality CEO John Acunto told CNBC.
Virtual concerts have already been happening in the metaverse through apps like Meta's AmazeVR Concerts, though Napster has not hosted virtual events yet.
Related: The Music Giant Behind Beyoncé, Harry Styles, and Adele Bars ChatGPT From Using Its Songs
Napster launched in 1999 and quickly became the first file-sharing service to gain a significant user base. Napster faced legal trouble when the band Metallica sued the company in 2000 for copyright infringement and won, leading the company to shut down its file-sharing operations.
As a music streaming service, Napster has lagged behind rivals like Spotify and Apple Music. According to Music Ally, Napster had around a million monthly active users at the end of 2020. In comparison, Spotify ended 2020 with 345 million monthly active users.
Infinite Reality was founded in 2019 and raised $3 billion in January from anonymous investors. In the same month, the company acquired the virtual shopping platform Obsess for an undisclosed sum.
