Yesterday we reported on MelodyVR’s planned acquisition of streaming service Napster for $26.3m in cash and stock, and wondered why the company was describing it as a $70m deal. A separate announcement from Napster’s majority owner RealNetworks cleared that up: the deal also saw MelodyVR assuming “approximately $44m in payment obligations, primarily to various music industry entities”.
The cash portion of the deal is $15m, and shortly after our story was published, MelodyVR raised $15.3m from a new share placement – it’s publicly listed on the London Stock Exchange’s AIM sub-market – to fund it. The acquisition is expected to be completed later this year.
MelodyVR boss Anthony Matchett talked to Rolling Stone yesterday about the company’s ambitions to combine livestreamed performances and a streaming music catalogue. “Historically, the major recorded music streamers aren’t content creators. They may get content from the record labels but they don’t create new content like we do,” he said. They may pay massive sums of money to broadcasters for exclusive rights to a show, but again that’s not their content. We come at this from a different angle.”
There are arguments against that. Spotify, for example, has recording studios for artists to record its ‘Spotify Singles’; in-house stages to host and record live sets; and a rapidly-growing roster of original podcasts. What’s more, it’s dipping its toes in the waters of livestreams too, initially through marketing partnerships for streams on other platforms – this Friday’s ‘Renaissance Royal Rave’ album-launch stream for Aluna on Mad Decent’s Twitch channel for example.
MelodyVR may well have a good point here: that the future of streaming services could involve offering a combination of recorded music and video livestreams. The question is whether it’s easier for MelodyVR to build that business through acquiring a streaming service that has 3m users across its B2C and B2B arms than it is for far bigger services like Spotify, Apple Music and/or Amazon Music (a sister company of Twitch) to bolt on the livestreaming side.
Don’t forget YouTube Music either. Already part of one of the biggest platforms for live video, it’s also working with artists on livestreams: for example, it’s the production partner – not just the distribution platform – for Atlanta-based rapper 6Lack’s ‘Live From The Ledge’ livestream this Friday.
None of this is to rain on MelodyVR’s Napster-acquisition parade, but rather to outline its huge challenge: the vision of original video performances plus on-demand audio may be correct, but how can it get the scale required to beat the bigger players to the punch, especially while balancing the necessary investment with those $44m of rightsholder obligations? But closing the acquisition is the next hurdle to clear, before tackling all that.