Music-focused virtual reality startup MelodyVR has announced plans to merge with streaming service Napster. To be clear: MelodyVR is the buyer, although the Napster brand will live on.
“Under the terms of the Merger Agreement, a wholly-owned subsidiary of the Company will be merged with and into Napster (with Napster being the surviving entity),” explained MelodyVR’s announcement to the markets this morning.
“The Company will pay consideration totalling approximately $26.3 million to the vendors of Napster to be satisfied in aggregate by $15.0 million in cash, and the issuance of approximately 200 million MelodyVR shares.”
The companies will operate independently for now, but the bigger vision is a service that combines live performances and music streaming, including a strategy to “scale the business through a subscription model, implementing a monthly fee similar to other subscription-based companies operating in the entertainment sector”.
According to MelodyVR’s separate press release sent to journalists this morning, Napster has more than three million users between its own-brand streaming service and those it runs for other brands as a B2B platform.
It generated $113m of revenues in 2019, but financials earlier this year from RealNetworks, which owns 84% of Napster, revealed that it was mulling options for a sale or new investment because Napster would “require outside funding in order to meet its anticipated cash needs over the next 12 months”.
“MelodyVR’s acquisition of Napster will result in the development of the first ever music entertainment platform which combines immersive visual content and music streaming. For music fans today, live and recorded music are intrinsically linked. We are as keen to see our favourite artists perform live as we are to listen to their albums,” said MelodyVR’s CEO Anthony Matchett.
“This is a tremendous outcome for two organisations with complementary platforms and loyal audiences, and we could not be more excited to be moving forward as one company,” added Napster CEO Bill Patrizio.