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RealNetworks doubles its stake in Napster

By | Published on Thursday 24 January 2019


So Napster is still a thing. As is RealNetworks. And there was you thinking that that headline was a golden oldie from the CMU Daily archives. Yes, RealNetworks – still a thing, remember – has doubled its stake in Napster – also still a thing. So now you know.

Officially speaking the Napster streaming music business is still owned by a company called Rhapsody International Inc. Rhapsody was once a division of RealNetworks, operating a digital music service called Rhapsody in the US. It was spun off as a standalone company in 2010, with MTV owner Viacom also a significant shareholder at the time. That company then acquired the Napster streaming service the following year, ultimately phasing out the Rhapsody brand that had only ever been used in the US.

Subsequently a New York-based investment set-up called Columbus Nova pumped a load of money into the business and became a key shareholder. But now RealNetworks has confirmed that it has basically bought Columbus Nova out of the business, meaning it is the majority shareholder again, with an 84% stake.

RealNetworks said in a statement that it had “acquired the debt and equity interests in Rhapsody International, which does business as Napster, from Rhapsody Applebee LLC, which is managed by Columbus Nova Technology Partners. The deal increases RealNetworks’s stake in Napster to 84% from 42%”.

Basic terms of the deal were also revealed, with the statement adding that “RealNetworks will pay $1 million in cash, and an additional $14 million over time subject to certain conditions, with additional consideration depending on subsequent events, that could total up to $40 million”.

The Napster download and then streaming service has never really enjoyed the profile or significance of the original Napster file-sharing network that was sued out of business in 2002 but retains an iconic place in music industry history.

In the early days as a legit licensed digital music set-up, Napster’s subscription model never really caught on as Apple’s iTunes set the precedent that the initial digital music boom would operate on a dollar-per-download basis. Then, when streaming took off and subscriptions did become the norm, Napster quickly fell behind the likes of Spotify.

Which is why you’d probably forgotten Napster was even still an option for your ten-pounds-a-month streaming music fix. Though in more recent years, Napster bosses have been pushing more into B2B streaming, providing a platform for other companies that want to offer musical streams on a subscription basis.

The boss of RealNetworks, Rob Glaser, yesterday said that it was that strategy that meant he was optimistic about the future of the streaming music business his company now controls again.

“Napster has reported five-straight quarters of positive operating income”, RealNetworks reassured its shareholders yesterday. “This success”, Glaser added, “was achieved by pivoting to a B2B strategy focused on selling the Napster platform as a service. We think Napster’s future is very bright”.