Episode 82: Napster - The Company That Changed Everything and Made Nothing

A single headline sent me down a rabbit hole: Napster, the name that once shook the music world, is now pausing streaming to chase AI companions and immersive experiences. We unpack what that actually means, tracing the arc from MP3 file sharing and courtroom showdowns to corporate hand‑offs, VR concerts, blockchain detours, and a bold new pitch about social music.

We start with the 1999 shockwave that rewired discovery overnight and explore why the industry struggled to catch up. From the lawsuits that ended the original service to the lost decade before streaming stabilised payouts, we map the behaviour shifts that shaped listeners, creators, and labels. Then we walk through the brand’s winding ownership path—Roxio, Best Buy, Rhapsody, Melody VR, Algorand, and Infinite Reality—and ask a simple question: does brand equity still matter if the product doesn’t clearly help artists and fans?

From there, we get practical. What would make AI taste companions genuinely useful? How could interactive playlists and spatial concerts create real value rather than add noise? We compare promises with what other music and Createch founders are building, probe big funding claims, and outline the metrics that matter for creators: data ownership, fair payouts, superfans, and conversion to paid experiences. The conversation lands on a clear takeaway—technology only matters when it moves money, meaning, or community.

If you care about music business strategy, artist monetisation, and where streaming goes next, this one’s for you. Subscribe, share with a friend who loves music tech, and tell us: revolution ahead or just a rerun of old hype?

Chapters

• 0:16 Welcome And Mission
• 0:52 The Headline That Sparked It
• 1:16 Napster’s 1999 Breakthrough
• 3:09 Lawsuits And Shutdown
• 4:48 The Web 2 Shock To Music
• 6:29 The Lost Decade Before Streaming
• 7:32 Data, Mavericks, And Brand Equity
• 8:50 The Acquisition Timeline
• 12:35 Napster’s New AI Pitch
• 14:03 Infinite Reality’s Big Claims
• 16:26 Hype, Doubts, And What’s Next
• 20:24 Open Questions And Sign‑Off

Transcript

SPEAKER_01: 0:16

You're listening to the music business buddy with me, Johnny Hammond, podcasting out of Birmingham in England. I'm the author of the book, The Music Business for Music Creators, available in hardback, paperback, and ebook format. I'm a music creator with a variety of credits as a writer-producer. I'm a consultant, an artist manager, and a senior lecturer in both music business and music creation. Wherever you are, whatever you do, consider yourself welcome to this podcast and to a part of this community. I'm here to try and educate and inspire music creators from all over the world in their quest to achieving their goals by gaining a greater understanding of the business of music. Okay, so I saw a headline this morning, everybody, and it really captured my imagination. And I thought, okay, let me dive a little deeper into this and build a podcast episode around it. So the title that I saw was this Napster suddenly halts music streaming service in favor of AI assistance. Napster has pivoted from music streaming to AI-powered assistants and digital personas. Okay, now I just paused there and thought, hold up, Napster. Napster, I didn't even know they were still going. Um now for anybody that is perhaps over the age of 40, well, you will know who Napster are, or who they perhaps were. Uh for anybody that is below that age and you've never heard of Napster before, uh, they are the company that changed everything and made nothing. Uh get your head around that. That's what I'm going to break down in today's episode. Here we go. Okay, so Napster started in the summer of 1999, right, by a guy called Sean Fanning with or alongside another guy called Sean Parker. You may know Sean Parker's name. He's the former president of Facebook. Now they started this as a peer-to-peer file sharing service, the first of its kind. Uh that was uh that's a normal term now, isn't it? Back in 1999, that was not a term that people used because it wasn't even a thing, but it focused on MP3 music, right? So it allowed music users, customers, consumers, millions of people all over the world to share music files directly from their own personal computers, right? Whilst using a kind of centralized index system to locate songs, right? And it spread like wildfire. Literally, tens and tens and tens of millions of users were sharing music globally, especially the younger demographic, right? So kind of you know, people from the ages sort of 16 up to 25, right? Uh Napster fundamentally overnight changed how people discovered and consumed music. Now it didn't last long, right? Because there were legal battles, right? So kind of 2000 to 2001, they quickly became, you know, hugely controversial because you know most of the music was copywritten, right? You know, on the music publishing side and also on the actual recorded music side. So, you know, major, major artists, the likes of like Metallica, Dr. Dre, Madonna, many more, filed lawsuits against Napster on the enabling of piracy, let's say. Uh, and courts, I'm I'm generalizing here, everybody, but courts ruled that Napster were liable for copyright infringement because it had centralized control and knowledge of illegal sharing. Remember, this was the first of its type, right? So in July 2001, Napster was ordered to shut down unless it could block copywritten material, uh, which proved to be, you know, unworkable, right? So a year later in 2002, uh Napster went bankrupt, and uh that was kind of the end of that, right? Because, you know, at that point music had moved largely digital and it shut down, it filed for bankruptcy, its assets and brand were later sold to other companies. Now, despite its collapse, right, Napster had already kind of sparked a massive shift in the music industry and inspired other decentralized uh peer-to-peer services, you know, which then kick-started the era of BitTorrents, which again changed everything. Okay, now let's just get some perspective on this, everybody. So, this was in the Web 2 era, right? We're talking about the early 2000s, quite a prominent time in terms of how a lot of things changed in the digital world. Uh, music changed dramatically, and the music industry couldn't keep up with the technology. Sounds quite familiar to the 2020s, doesn't it? But we'll come back to that in a bit. So at this point, you know, people were no longer actually spending the money that they used to spend on music, and a lot of things changed, right? So, you know, when people started to wear like expensive headphones, right? Again, that never used to be a thing. If you go back to the 90s and before then, generally people in the street were not wearing expensive headphones. Hard to get your head around, right? Because, well, not headphones, not literally, but because it's just the norm now, right? Uh it wasn't the norm, and people were kind of doing things like that because they didn't have to spend any money on music because they were getting it all for free. This, of course, then extended into other things such as films and TV shows, and before you know it, you're into this toxic whirlwind of the mid-2000s, whereby people didn't really feel like they wanted to actually spend money on music and films and TV anymore. Now, we now know that that intellectual property has been partially remunerated through streaming services, right? But there was a giant black hole between kind of you know 2000 and let's say around 2013, where that vacuum just felt like a black hole. Everything was stagnant, you know, nobody really kind of knew. Do I buy this? Do I get it for free? Until that changed into the streaming economic that we now know. Now, speaking of the economics, think about this for a moment. Napster never made any money, uh, but what they did acquire was a huge database, right? This is the web two era, remember everybody, right? So, you know, this was kind of before it became normal to share data, to sell data, and to get investment for it, right? Again, that's the norm now in the 2020s, but it was brand new back then. Now, the other aspect to Napster was this, and this could still be argued that this is very much true today. Um, they were seen as an entity that changed things in a maverick fashion, right? And with that comes a sense of rebelliousness. Another thing that comes with that is a sense of kind of brand equity, right? Now let's think about the brand equity of this because this is a company that's been sold again multiple times since then, which led towards their most recent acquisition. So let's just go through the timeline for a minute. Okay, so I mentioned earlier that uh that Napster were forced to shut down in 2001 and then in 2002 they be they went bankrupt, right? They hadn't they hadn't made money. I think from what I read that you know the intention was never really to make money, but just to provide a technological shake-up, which they certainly did. However, just after that, right, a company called Roxio acquired them, right? So Roxio acquired the assets of Napster after they become bankrupt. This was at an auction, right? And then they relaunched Napster as a legal music service in 2003, right? Just think about that for a minute, right? 2003. So that was what, roughly 10 years before Spotify had launched, loosely speaking, right? Now, also bear in mind that iTunes had launched, right? I think it was around 2001 iTunes had launched, and iTunes were kind of making people change the way that they also acquired music. You had to pay for it, of course, rightly so. Uh, but it shifted the market into buying individual songs and buying singles. And this was the kind of the time where people started to listen to songs more than albums. Now, if we think about the album model there, and let's just think about the time period again that we're in, right? So 2002, 2003, right, is where the is the launch of where Roxio actually rebrand themselves uh as Napster and become this legal music service, right? So this is like four years after the Napster boom, right? So all of a sudden they start charging, and it doesn't really work that well. Now I've tried to research exactly kind of what went on during that time to that business, and it's quite difficult to actually ascertain fully what went on. But what we do know is that around about five years later, uh in 2008, Best Buy, so a US electronics retailer, Best Buy, purchased Napster from Roxio and they paid 121 million. That's the report that I've got, right? So 121 million um for the rebranded Roxo that's then Napster, right? So the original starters of of Napster uh, you know, are no longer a a piece of the puzzle here. They're no longer a part of what comes with that company and with that brand, right? Now, in 2011, Rhapsody acquired Napster, right? So that's what when we think about the acquisition there, right? What we're we're not just talking about technology there, we're also talking about subscribers, right? Data, right? So Rhapsody International in 2011 by Napster from Best Buy and integrate it into its streaming business, right? In 2016, uh Rhapsody actually rebrands itself as Napster, right? Again, we're going back to that brand equity thing again. So even though Napster started out in 99 and it was kind of over by 2001, you've got Roxio that used the name, you've got Best Buy that used the name, you've then got Rhapsody that used the name. Now, the story doesn't end there. In 2020, Melody VR acquired Napster in a deal that was worth uh around about 70 to 80 million US dollars, right? So British V uh Melody VR, they're a British company, right? The British Immersive Music VR company. Um now uh moving on from there uh in 2022 Napster was sold to a blockchain focused company called Algorand, along with an investment firm called Hive Mind Capital Partners. Now, at this particular point in time, I'm not gonna lie to you, everybody, I didn't know this. I've only dug into this research from seeing this headline that I saw this morning because I didn't know that Napster was still even particularly active, right? Now, again the story doesn't end there. 2025 the Napster was acquired by Infinite Reality for around about 207 million US dollars with plans to expand Napster into a social and immersive music platform, right? So that's the timeline that we're kind of dealing with here. Okay. So flash forward to January 2026, where we are right now. Um I'm on the homepage here of uh Napster.com and it says this the next Napster moment is almost here. We're building something new with you in mind, a more personal, more creative music experience. Um they then list AA AI-powered experiences, so meet companions, AI that understands your music taste and helps you discover what's next. Um, that's that sounds interesting, but there's nothing particularly new about that. As we know, there are other streaming services that can do that. Uh, interactive playlists, playlists that evolve with you. Again, there's nothing particularly new about that. Never a listen alone. A world where music becomes conversation or and you're a part of something bigger. Okay, now I I I if you listen to this podcast regularly, you will know that I've spoken to a lot of um, you know, pretty uh powerful, influential CEOs of uh AI Createch companies who have raised uh millions and millions in seed money to be able to do something very similar to that. Um so again, nothing particularly new there. At the bottom of the website, it says this Napster powers the future of digital experiences through spatial computing and AI. Our innovative software production and marketing solutions help brands and creators build immersive experiences that drive engagement, data ownership, and brand value. Now, they're lovely words, aren't they? But um they don't really mean a whole lot to me because they sounds it kind of sounds like AI talk in itself. Um, it's very generic, uh, there's a lot of buzzwords to it, which are used by a lot of you know create startups that uh are looking for investment. So I decided to dig a little deeper. Okay, so I found this article uh from The Guardian, so the UK publication The Guardian, um, which is from a rather I think March 2025. Uh it's gone with the headline, Napster now a streaming service, sells for 207 million US dollars to Infinite Reality. So a brand that was notoriously, quoting The Guardian here, the brand that was notoriously connected to music piracy before re-emerging as a subscription music service has been sold to Infinite Reality for 207 million US dollars. The tech startup announced on Tuesday it had brought Napster in the hopes of transforming the streaming service into a social music platform where artists can connect with fans and better monetize off their work. Let me just pause there for a minute and again point out the likes of some of the company CEOs that I've spoken to before. So uh so Lloyd Perrin from Serenada, uh Matt Jones from Medallion. This is all what they're doing, right? So we can see that there's a movement here moving towards that, right? Uh there's a quote here the internet has evolved from desktop to mobile, from mobile to social, and now we are entering the immersive era. Yet music streaming has remained largely the same. It's time to reimagine what's possible, said Napster's CEO in a blog post. So, amongst its plans to update Napster, Infinite Reality said it would create virtual 3D spaces that will allow fans to attend concerts and give musicians or labels the ability to sell digital and physical merchandise. Let me just pause there for a minute. Again, if you listen to this podcast regularly, you'll know that I've spoken to people uh in that industry, right? Uh people like uh Ryan Oyang from IYK, who chips and is in the NFT world, has again raised millions and millions of seed money in trying to uh bridge the gap between digi and physical, right? Uh I've also made a bold prediction about what I think may happen um in virtual 3D spaces, uh especially with the advent of 4K television, immersive audio, etc. So maybe that will uh maybe they're trying to move into the live space, right? I also previously boldly predicted that I don't think that the DSPs will move into that, so it's going to take someone to do so. Maybe they're the answer who we will see. Um we can think of no better another quote, we can think of no better use case for our technology than putting it in the hands of music artists who are constantly pushing the boundaries of what's possible, said Infinite Reality's chief business officer. Okay, so let's just go a little deeper into who infinite reality are. Okay, so according to an article that I found on Forbes uh from April 2025, Infinite Reality are a Florida-based organization who claims that it's raised more than 3 billion from a sole unnamed investor. Um, their CEO, John Oconto, ran onto a sprawling stage at a studio space in late February in Los Angeles to make a bombastic, if defensive, sounding speech all about what he thinks the future of the sector could look like. Now, when a venture-backed startup announces a large investment or a fundraising round like this one, there is a scant requirement for verification or for document. Only the company and its investors are actually required to know the terms of the deal. Over the past few years, venture money has poured into tech startups at an extraordinary pace, right? So if we look back over the the last 10 years and we look at all the money that's gone into tech startups, it's it's kind of hard to keep up with, right? That's why I'm interested in talking to so many technological companies and uh tech startups, because we're in an age now where technology is meeting the music industry and it kind of has to fuse itself together in order to find a future. Now, again, referring to that Forbes article, it says infinite reality is not well known within the industry, and the fundraising announcement came as a shock. There's a quote here that says, No one had heard about it. I also talked with other people around the industry, and they were like, Who? Who are they? What? And that was from an analyst um that uh is a Lithuanian-based um uh analyst in the Metaverse and Web3 uh research firm uh DAPRadar. So the funding announcement was also the first time that Herman Narala, founder of Metaverse Developer Improbable, uh, which was reportedly valued at around 3 billion after raising money from Softbank, um, had heard of the startup as well. Um now uh Herman says we have run hundreds of metaverse events with some of the biggest brands uh in the world, with tens of thousands of people over the last year. I have thus far never encountered this company as either a supplier or a customer, nor as any partner of ours mentioned them. Okay, now there's something perhaps slightly kind of you know uh suspect about that, right? But I could be way off the mark with that because one of two things is going to happen next. Either Napster will assume its name once more with a new kind of musical identity, and it will create new technologies that challenge what we know, right? That Napster moment that its very own website refers to, and it changes the game once again forever. Or it will just continue to float around using its name, its brand equity, but not make a huge difference. The reason I pull a sharp focus on it today, everybody, is because it's difficult to fully fathom and fully digest the impact that Napster had on this business throughout the world forever when they first launched. It changed everything. If everything that we look at right now, in the early part of 2026, if you remove Napster from the history of music, the landscape would look dramatically different. That's how impactful they were. But if we look at the people behind the company then, they are long, long gone from Napster. So I mentioned previously about Sean Parker and about Sean Fanning. Now, these are two people that are both still very, very much in the Web3 world, in the in the tech world. They do talks, they're involved with various different companies, but it's not Napster. And Napster seem to be falling in line with what other AI createch companies are doing. Now, the thing that's really interesting to me about a lot of the new technologies that we're starting to see is that a lot of the people that go into them uh are not necessarily music people. Now that's not a bad thing, it's just an observation, it's a very interesting thing because if we start to combine where music's at, where music could be, and then the role of new technologies, we could be onto something very, very, very exciting, and I'm sure we will be. But but will Napster as we knew it ever be a part of it? That's for you to decide, everybody. I just thought I'd pose the question. Sometimes, as I said before, the questions are more interesting than the answers on occasions. Anyway, have a think about that. I know I certainly will. There's a lot changing and it's moving fast, and it's hard to keep up with it, right? So that's why I kind of sometimes just chew these things up and simplify them in sort of 20-30 minutes if I can, so that you don't have to. Um, anyway, there's a little bit of history on Napster. That's what's happened um over the last sort of 20 years or more, let's say, and let's see where it goes in the future. Who knows if I'll ever mention them again on this podcast or not? Uh, but it's certainly worth thinking about this week. Anyway, have a great day wherever you are. Get in touch, feel free, engage with the podcast, engage with me, bring me your questions, share it, share it with your friends, all that good stuff. Have a great day. Until next time, may the force be with you.