Revolutionary music industry brand Napster is planning its renaissance around digital currencies and non-fungible tokens (NFTs). The company was acquired by crypto investment firm Hivemind Capital Partners, owned by former Citigroup Inc (NYSE:C). executive Matt Zhang.
The free music platform paralyzed its operations in 2001 and declared bankruptcy the following year after several lawsuits for copyright infringement. Now it plans to return with digital assets, despite the harsh crisis they are going through, better known as the crypto winter.
UK-based Napster is even planning to launch its own token, $NAPSTER. The idea is for users of the streaming platform to use it to purchase tickets and experiences with artists promoted by the company, Zhang and Napster CEO Emmy Lovell told Bloomberg.
Napster’s relaunch draws comparisons to the move by LimeWire, the old file-sharing site that has emerged as a marketplace for NFTs a decade later. But it is also seen as a potential rival to cryptocurrency platforms like OpenSea, which are innovating in the digital space.
Emerging amid the Crypto Crisis
This year the value of cryptocurrencies and NFTs has plunged to worrying levels for many investors. In 2021, they enjoyed high popularity and growing adoption despite the warnings of the implicit risk launched by people and institutions.
The commercial activity of NFT projects was the first to fall at the beginning of the crisis. NFT buying has slowed as investors are turning to safer asset classes and the crypto crisis threatens to wipe out many of these highly speculative businesses.
In addition, non-fungible tokens have lately been involved in copyright lawsuits between artists and speculators. However, Napster, which already knows a lot about this type of controversy, is going ahead with its plans.
“Obviously it was completely illegitimate and there was a big backlash. But it does still continue to have the reputation of a disruptor and an industry innovator,” Lovell said, referring to the platform’s initial launch in 1999.
What Is Known So Far about the New Business
In January, the company, which had been listed since 2020 on the London Alternative Investment Market, transferred most of its assets to another company. Bloomberg indicated that the business was valued at a loss of $45.6 million.
During the first half of last year, Napster reported revenue of £32.4 million ($39.5 million) according to publicly available data. Rival Spotify (NYSE:SPOT) Inc. saw grosses of some 4.5 billion euros ($4.75 billion) in the same period.
Napster executives said the reborn platform will run on blockchain provider Algorand’s network. But the company hasn’t provided a full launch schedule.
Algorand and British investor Alan Howard’s cryptocurrency fund Brevan Howard Digital Assets are part of the Hivemind-led consortium that bought the music platform a few months ago for an undisclosed amount.
What is known for now is that Napster will issue a token for its online users to purchase its services that include live music experiences and product sales in a so-called “light paper” that was published on Wednesday.
“A Paradigm Shift”
Zhang clarified that these services will be offered on a limited basis during the launch, as the project is still at an early stage. The $NAPSTER token supply cap will be 10 billion coins. Although Zhang stated that this figure is “meaningless” until the operation of the new token is decided.
The token, which will be managed by the Napster Innovation Foundation, will offer rewards to users denominated in $NAPSTER. This would include the right of the token holders to have a say on how the platform is managed.
On the sustainability of $NAPSTER as a business, Zhang acknowledges that launching a token is not enough. “Despite the short term volatility in the market, personally, I remain very, very optimistic about how this actually will bring a real use case and enduring value,” he said.
He predicted that the new music streaming platform “actually brings a paradigm shift to many sectors. Music is going to be one of them.”