Napster’s Next Chapter: From Pioneering Music Sharing to a $207 Million Acquisition

More than 25 years after shaking up the music industry, Napster has been acquired for $207 million by Infinite Reality, a company focused on metaverse technology.

The deal marks another evolution for the brand, which first gained notoriety in 1999 as a peer-to-peer file-sharing platform that allowed users to swap songs for free—long before the rise of legal streaming services.

Founded by Shawn Fanning and Sean Parker, Napster quickly became a disruptive force in the music industry, enabling millions of users to share MP3 files without paying for them. The platform faced fierce opposition from record labels and artists, most notably Metallica, which sued the company for enabling copyright infringement. Mounting legal battles led to Napster’s shutdown in 2001 and its subsequent bankruptcy in 2002.

Despite its early legal troubles, the Napster brand endured. Over the years, it changed ownership multiple times, transitioning from an illegal file-sharing service into a legitimate music streaming platform. By 2016, Napster was offering licensed on-demand streaming for a monthly subscription, though it remained a smaller player compared to industry giants like Spotify and Apple Music.

In 2022, blockchain company Algorand and investment firm Hivemind acquired Napster, aiming to integrate Web3 technologies into its streaming services. Now, with its acquisition by Infinite Reality, Napster is poised for yet another transformation.

Infinite Reality’s CEO, John Acunto, envisions Napster as a key component of a virtual music ecosystem. The company plans to use Napster’s name and music licenses to create immersive 3D spaces where fans can attend virtual concerts, join listening parties, and purchase digital or physical merchandise.

“When we think about clients who have audiences—whether they’re influencers or creators—it’s important that they have a connected space around music and musical communities,” Acunto told CNBC. “We just don’t see anybody in the streaming space creating spaces for music.”

Infinite Reality has been expanding rapidly, acquiring companies like the Drone Racing League and virtual shopping brand Obsess. The company raised $3 billion earlier this year at a valuation of $12.25 billion, although it has not disclosed its investors.

With its latest reinvention, Napster joins the ranks of other once-iconic tech brands that have found new life, such as Kodak, Nokia, and Tumblr. While details on its metaverse plans remain limited, Acunto is confident in Napster’s ability to make an impact once again.

“I think there’s no better name than Napster to disrupt,” he said.

With input from CNBC, Axios, and Business Insider.