Napster was the original online music startup.
For a brief, glorious period in the late 90s and early 2000s, the service was being used by many high-school and college students to share and download media files, mainly MP3s. It conditioned a generation of consumers to expect to be able to access music for free.
The company actually stumbled along for a good few years after that. It was passed between a number of owners, including German multimedia giant Bertelsmann Group, and, even for a brief time, the retailer Best Buy, before being acquired in 2011 by Rhapsody, a Seattle-based subscription based streaming-music pioneer, which counts Spanish telecom giant Telefonica as an investor.
And so Napster lives on to this day, as Rhapsody’s brand in Latin America and Europe.
Today Rhapsody announced that it has hit 2.5 million paying subscribers globally, up 60% from a year ago. Its CFO, Ethan Rudin tells Quartz that this means the company is the “clear number two” in on demand streaming, behind Spotify, which recently said it had 15 million paying users.”I’d love to big as big as they are, but we are perfectly comfortable being patient,” he says.
A significant part of the subscriber growth comes from a recent deal with T-Mobile US, which offers discounted and free internet radio, with some on-demand functionality, to the US wireless carrier’s customers. “We have the good fortune of [T-Mobile CEO] John Legere being an extraordinary music fan,” Rudin says. “They are in Seattle, we are in Seattle, we have found it a pleasure to work with them, there are a lot of similarities culturally with what they represent.”
Napster has struck similar distribution deals with wireless carriers in France and South America.
The streaming music landscape could soon change pretty dramatically with Apple poised to soon integrate Beats, the service it bought for $3 billion last year, into its next update of its operating system, probably underneath the better known iTunes brand.
Yet Rudin does not expect the device giant, the world’s biggest company that really has no need to make money out of streaming, to run away with that market. ”When iTunes came out with their internet radio product, you didn’t see a mass defection of people from Pandora [the dominant internet radio service in the US]” he says. “So Apple still has to provide a great experience that is emotionally engaging. They have proved to be a master of the download market and we will see what they do in streaming.”
In other words, the owner of Napster, which started this whole digital music revolution, is going to be just fine.