RE: sunday times article2 Oct 2022 09:18
When an 18-year-old Shawn Fanning launched Napster, the service famed for taking music piracy mainstream, in June 1999, the top song on the Billboard charts was Livin’ la Vida Loca. Mercifully, Ricky Martin’s ditty has long since faded into history. Napster, however, just won’t die.
Matt Zhang, a 37-year-old New York banker turned crypto investor, bought it in May, turning his $1bn investment firm Hivemind into the company’s fifth owner since the music industry bankrupted the business in 2002 under a mountain of lawsuits.
Zhang’s plan: to turn Napster into “a music super-app” for the “post-streaming era”. What does that actually mean? By transforming into an online concert venue, where people can attend virtual shows and buy digital swag from their favourite bands, paid for in a forthcoming Napster cryptocurrency.
Napster will, of course, still offer streaming. The company, which is based in London and was listed on the Aim exchange until Zhang scooped it up, has millions of people who pay $10 a month to listen to music. It is a distant competitor, however, to the powerhouses of Apple and Spotify. In the six months through last June — the company’s last set of public accounts — Napster lost £14 million on £33 million in sales.
Zhang’s bet is that more than 20 years after Napster launched the streaming era, the industry is once again at the cusp of a huge shift in its core business model, this time driven by the emergence of decentralised blockchain technology that enables a more direct relationship between artists and fans, and lubricated by digital currencies. “We’re not unique at all. There’s many better investors in the music space out there. But I think the timing is unique,” Zhang said. “The next paradigm shift of the music industry is in front of us.”
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Last week he hired British music executive Jon Vlassopulos as Napster’s new chief executive.
Vlassopulos was previously at Roblox, where he set up a music operation at the $22bn gaming giant. Amid Covid lockdowns, Vlassopulos lured top names such as the rapper Lil Nas X, who netted more than $10m selling digital goods to fans who attended a virtual concert he performed on the platform.
Zara Larsson, the Swedish pop star, brought in more than $1m selling outfits and customisable avatars inside Roblox. She told the BBC that to make a similar sum via, say, Spotify, “would take a long, long time and hundreds and millions of streams”. She added: “Streaming services don’t pay the most.”
It is impossible to overstate the seismic effect Naspter had on the music industry. Overnight, every song imaginable was free to download. Record labels and artists, led by Metallica’s Lars Ulrich and rapper Dr Dre, kneecapped Napster, but not the digital music revolution it unleashed.
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