(Bloomberg) — Napster, the brand that has become synonymous with free music for a generation of consumers, plans to rebuild its business around cryptocurrencies and non-fungible tokens even as demand for these assets has collapsed .
The redesign of the streaming platform is part of a private acquisition by Hivemind Capital Partners, the crypto business of former Citigroup Inc. executive Matt Zhang. The UK-based company plans to launch its own token, $NAPSTER, which music fans can use to purchase tickets and artist experiences on its new platform, said Emmy Lovell, CEO of Zhang and Napster.
Napster’s move follows a similar revival of LimeWire and potentially pits it against crypto-native platforms such as OpenSea that are looking for new ways to expand into the digital realm. NFTs, a form of digital collectibles, grew in popularity last year, but demand has since waned, with one in three such projects seeing little or no commercial activity after their initial launch. . NFTs have also been a hotbed of copyright infringement fights, with high-profile lawsuits between music figures and speculators.
That hasn’t deterred Napster, which has gone through many forms and owners since it was first shut down in 2001 after being sued for copyright infringement. The company re-adopted the Napster name in 2016.
“Obviously it was completely illegitimate and there was a big backlash,” Lovell said of Napster’s debut in an interview. “But he continues to have a reputation as an industry disruptor and innovator.”
Previously listed on London’s Alternative Investment Market since late 2020, Napster transferred nearly all of its assets to a new private company in January, a process that valued the loss-making business at $45.6 million. Napster reported revenue of £32.4 million ($39.5 million) for the first half of 2021 in its latest publicly available filing. Spotify Inc. raked in around 4.5 billion euros ($4.75 billion) over the same period.
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The new Napster platform will run on blockchain provider Algorand’s network, Zhang and Lovell said, declining to provide a timeline for a full launch. Algorand and Brevan Howard Digital Assets, the crypto fund of British billionaire Alan Howard, were among the consortium of buyers involved in Hivemind’s acquisition of Napster, which closed in the first quarter for an undisclosed amount.
With its new token, Napster plans to reach out to music listeners, rights holders and artists, hinting at future services including live music experiences and merchandise sales in a so-called “paper light published on Wednesday. Products will be limited at launch because the project is still in its early stages, Zhang said.
While the supply of $NAPSTER tokens is expected to be capped at 10 billion coins, Zhang said the figure is “meaningless” until further decisions are made on how the token will operate. The coin will be managed by the Napster Innovation Foundation and will offer rewards to stakeholders, denominated in $NAPSTER. Finally, $NAPSTER holders can also have a say in how the company is run.
Zhang acknowledged that while launching a token is easy, some coins are released to market without much thought to the aftermath, whether they are sustainable or add real value. A sell-off fueled by central bank monetary tightening and a series of high-profile crypto booms saw Bitcoin fall nearly 70% from its all-time high.
“Despite the short-term volatility in the market, personally, I remain very, very optimistic about how this will deliver real use case and lasting value, and in fact bring about a paradigm shift across many industries,” did he declare. “Music is going to be one of them.”
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