Napster, the pioneering pre-blockchain music streamer, makes its first big move in the Web3 space. As one of the top 5 NFT music marketplaces, Mint Songs is now in the hands of Napster. However, this acquisition is one of the many planned as the new iteration of Napster tries to find its footing in the world of web3.
Napster Revisiting its P2P Roots But Now in Web3
On Wednesday, the CEO of Napster, Jon Vlassopulos, issued a press release that Napster Ventures acquired the sunsetting Mint Songs. The music startup tells the story in its name. Just as people can mint images into non-fungible tokens, so can audio files be minted in the same way.
This can revolutionize the music industry because artists can embed royalty logic into the smart contracts of minted songs. In turn, artists cease to rely on big music companies for scraps. Depending on the music license, record label companies can take as much as 80% cut off musicians and bands.
In stark contrast, Mint Songs allowed artists to take 95% of the proceeds.
As Napster takes over Mint Songs, the former top brass will remain in charge. Former Head of Product Nate Pham will lead Napster’s Web3 initiative, while the Mint Songs co-founder and CTO Garrett Hughes will serve as an advisor to roll out the new Mint Songs roadmap.
“We already have hundreds of thousands of artist storefronts where our fans go to listen to music every day so adding collectibles is very contextual in the fan experience,”
Jon Vlassopulos, Napster CEO
Napster is a natural fit to take over Mint Songs. Founded in the early internet days in 1999, Napster created a peer-to-peer network for users to share music without any mediators. At the time, many faulted Napster for ruining the music industry as music-sharing became rampant, having reached 80 million users in just two years.
For comparison, it took Spotify 16 years to reach 456 million active users. Annually, this is 28.5 million users on average vs. Napster’s explosive growth of 40 million per year.
However, Napster’s glory began to fade away following the copyright infringement notices issued by Dr. Dre and Metallica. In July 2001, Napster settled the case for $94 million, with a stipulation that Napster would block music sharing for any artist that requested it.
Napster’s Web3 Revival
In August 2020, MelodyVR bought Napster for $70 million. Surviving on the edges, the music streaming platform shrunk its user base to just 3 million users at the time of the acquisition. Interestingly, MelodyVR’s purchase was explicitly aimed at competing with Spotify and Apple Music.
After failing to do so, two Web3 companies acquired Napster, Hivemind, and Algorand for an undisclosed price in May 2022. In the transitional period, Emmy Lovell headed Napster, having previously worked for the BBC, Warner Music Group, and EMI Music.
Hivemind Capital was founded just a year prior, in 2021, as a “multi-strategy crypto-focused investment firm” based in New York. On the other hand, the eponymous Algorand developed the Algorand (ALGO) proof-of-stake blockchain focused on fast payments with near-instant finality similar to Solana.
The two Web3 companies bought Napster to “once again revolutionize the music industry by bringing blockchain and Web3 to artists and fans”, as officially relayed on Hivemind’s Twitter.
Why Did Mint Songs Shut Down?
On September 14, 2022, Mint Songs announced they would cease minting on Polygon (Mint Songs Factory) and Ethereum (Mint Songs V2). Unlike Rally’s NFTs which became defunct when their sidechain shut down, Mint Songs migrated all metadata on-chain via NFT.storage.
This secured Mint Songs’ collections as long as Ethereum stays online. Until then, the platform minted 90,000 music NFTs from nearly 2,000 artists that received ~$100,000 in revenue. Yet, just after one and a half years, founders Dwight Torculas and Garrett Hughes started to wind Mint Songs down.
It appears that Mint Songs was already in the acquisition negotiation phase.
“As we looked for a partner that could take what we’ve built over the last two years and give artists a true marketplace for their assets where millions of fans are already active, it became abundantly clear that Jon and Napster have the vision to finally take web3 music to the mainstream.”
Garrett Hughes, Mint Songs CTO and co-founder
Nathan Pham, now Napster’s Web3 Head of Product, posted at the end of July that Mint Songs was laying off staff, and he was a part of that reduction. In the end, Mint Songs appears to be a classic story of startup trailblazing, only to become a part of a larger vision by more prominent players.
What Stands in Napster’s Way?
Whether Napster will succeed in restoring its former glory depends on how the NFT asset class is perceived. There are clear benefits to minting music. In the case of Mint Songs, the platform gave artists 95% of the proceeds. This gives them complete control and flexibility to focus on content rather than a business.
Likewise, artists can issue NFT collectibles and other incentives to engage their fans. Much will also depend on Ethereum’s scaling, both its mainnet and how easy it is to use Arbitrum, Polygon, and other layer-2 networks.
For the time being, the NFT asset class is driven by speculation. According to CoinGecko’s NFT survey in April 2022, flippers represent 42% of NFT ownership. At the same time, metaverse/gaming NFTs are the most common NFT type, owned at 35.8%.
More importantly, the sentiment that would apply to Napster’s Web3 expansion is in the low numbers. Only 21.8% of respondents place artistic value/attachment on NFTs. With that said, music is an integral part of gaming and the metaverse.
If that ecosystem gains traction, as legacy financial institutions predict, music-based NFTs will inevitably follow suit. And just as Polygon managed to forge so many business partnerships to become the go-to Ethereum rail, so will Napster have to accomplish the same.
This article originally appeared on The Tokenist
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