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A quarter century ago, Napster was notorious on the internet for allowing people to swap songs for free, long before the music industry had come up with a model for the digital age.
The service was shuttered in 2001 amid mounting legal battles, and filed for bankruptcy the following year. But the brand isn’t dead.
On Tuesday, Napster was acquired by 3D technology company Infinite Reality for $207 million. Infinite Reality CEO John Acunto told CNBC in an interview that the one-time file-sharing phenomenon will be used for marketing in the metaverse.
Infinite Reality plans to create virtual 3D spaces that allow music fans to enjoy concerts or listening parties together, and let musicians or labels sell physical and virtual merchandise.
“When we think about clients who have audiences — influencers, creators — I think it’s very important that they have a connected space that’s around music and musical communities,” Acunto said. “We just don’t see anybody in the streaming space creating spaces for music.”
Napster is the latest iconic technology brand from decades past to get a new life, following acquisitions and revivals in recent years of Kodak, Nokia and luxury audio brand McIntosh.
“I think there’s no better name than Napster to disrupt,” Acunto said.
Napster was launched in 1999 by Shawn Fanning and Sean Parker, and became the first significant peer-to-peer file-sharing application. It allowed PC users to swap MP3 files, which could be played in a media player like Winamp, and build collections of digital popular music for free.
The record industry quickly took aim at Napster, accusing the company of allowing people to share pirated files. Heavy metal band Metallica sued Napster, and was followed by the Recording Industry Association of America. After bankruptcy, Napster’s assets were sold off to a series of owners, current CEO Jon Vlassopulos told CNBC.
Since 2016, Napster has been a music streaming service offering on-demand streaming of licensed tracks, currently for $11 per month. It’s a small player in a world dominated by Spotify and Apple Music. In 2022, Napster was bought by blockchain company Algorand, whose investors brought in Vlassopulos.
Napster holds official licenses to stream millions of tracks, agreements that were attractive to Infinite Reality, which says that its version of Napster will “disrupt legally.” And Algorand’s background in blockchain technology was intriguing to Infinite Reality, which also develops Web3 technology, Acunto said.
Alongside streaming music, the combination with Infinite Reality will allow Napster to offer more social features, digital merchandise and shopping.
Artists will be able to create “crazy environments that are really only limited by their imaginations” in Napster, Vlassopulos said. As an example, he imagined a reggae artist who might want to create a beach hangout environment.
Acunto says that when music fans can share a virtual space together, it will be like “Clubhouse times a trillion.” He was referring to the entertainment and virtual events app that became popular during the pandemic before petering out when society reopened.
Infinite Reality, which is building a headquarters in Fort Lauderdale, Florida, was founded in 2019 and has been acquisitive in recent months, buying companies such as the Drone Racing League, Landvault and virtual reality retail brand Obsess.
In January, the company announced that it had raised $3 billion at a $12.25 billion valuation, although it didn’t reveal any investors. Acunto told CNBC that the company’s investors want to stay anonymous.
