Napster

Reviewed acquired Updated Mar 24, 2026

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Location San Mateo, CA
Founded 1999
Latest Stage Venture
Total Raised $67M+
Website https://www.napster.com
Acquired By Infinite Reality
Sector
media-entertainment consumer-internet

Investors

Ron Conway Angel (2000)
Sean Parker Co-Founder (1999)
Ann Winblad Early (1999)
John Hummer Early (1999)
SV Angel Angel (2000)
Founders Fund Co-founder (1999)
Hummer Winblad Venture Partners Early (1999)

Founders

Shawn Fanning Co-Founder
Sean Parker Co-Founder
Jordan Ritter Co-Founder

About

Napster was the pioneering peer-to-peer music file-sharing service that launched in June 1999 and fundamentally changed how people consumed music 1. The company was incorporated in May 1999 by Shawn Fanning and his uncle John Fanning, with Sean Parker and Jordan Ritter as co-founders 2. Shawn Fanning conceived the idea at age 18 while a student at Northeastern University, after hearing his roommate complain about difficulties downloading music online 3. Parker raised the initial $50,000 in seed capital, and the service launched on June 1, 1999 4.

The platform grew explosively, reaching approximately 50 million users within its first year 4. However, the Recording Industry Association of America (RIAA) filed a copyright infringement suit in December 1999, followed by a separate suit from Metallica in April 2000 2. After a series of legal defeats, Napster voluntarily shut down on July 1, 2001 and filed for Chapter 11 bankruptcy in June 2002 2.

The Napster brand has since changed hands multiple times: Roxio acquired the name and intellectual property for $5 million in November 2002 and relaunched it as a legitimate subscription service 2 5. Best Buy acquired Napster for $121 million in September 2008 6. Napster merged with Rhapsody in 2011 7. MelodyVR acquired Napster for $70 million in August 2020 5. Hivemind Capital Partners and Algorand acquired Napster in May 2022 8. Most recently, Infinite Reality announced its acquisition of Napster for $207 million in March 2025 9.

Funding History

Date Round Amount Lead Co-investors
1999-09-06 Angel $250K (initial) Yosi Amram — 14
1999 Angel $200K Angel Investors LP (Ron Conway) — 15
2000-05-22 Series A $15M Hummer Winblad Venture Partners Angel Investors LP 11 16
2000-10-31 Debt $50M Bertelsmann AG — 17 18

Notes on funding:

  • Yosi Amram, a venture capitalist and CEO of ValiCert, was Napster’s first outside investor. He put an initial $250,000 into the company over Labor Day weekend 1999 14. Amram’s investment was conditioned on the appointment of Eileen Richardson as interim CEO and the company’s relocation from Massachusetts to San Mateo, California, which occurred in September 1999 2 3. FundingUniverse’s company history describes the total early angel commitment as $2 million 2, though Fortune’s oral history and contemporaneous accounts specify Amram’s personal check as $250,000 14.
  • Angel Investors LP, co-founded by Ron Conway, invested approximately $200,000 in Napster during the 1999-2000 angel round 15. Conway later described Napster as “the most disruptive company” of its era 10.
  • Hummer Winblad Venture Partners announced a $15 million Series A on May 22, 2000, with participation from Angel Investors LP and other individuals 11 16. Hummer Winblad contributed $13 million for a 20% stake, implying a $65 million post-money valuation 2. Hummer Winblad partner Hank Barry was installed as interim CEO, and co-founder John Hummer joined the board 11 16. Other venture capital firms, including Kleiner Perkins Caufield & Byers, had explored investing but John Fanning’s insistence on retaining board control scuttled earlier deals 2.
  • Bertelsmann AG, the German media conglomerate and owner of BMG, announced a strategic alliance with Napster on October 31, 2000, which included a $50 million loan to develop a commercial subscription music service 17 18. The loan carried a warrant permitting Bertelsmann to convert the debt into a Napster equity stake, and BMG agreed to drop its copyright infringement suit once the new service launched 17 18. Between October 2000 and October 2001, Bertelsmann loaned Napster a total of approximately $85 million 12.

What Investors Say

Ron Conway on Napster’s legacy: “In the day, it was the most well-known tech company on earth… Napster was the most disruptive company, but because of egos at the record company labels and egos at the investor level of the company, the company went down in flames. However, coming out of the flames are all the streaming services. Spotify is a company that Sean Parker, the cofounder of Napster, went over and took another swing at. Now streaming is an everyday thing.” — Ron Conway, Fortune, December 2020 10.

What Founders Say

Sean Parker on the music industry after Napster: “I think I learned a lot about persistence and patience. It’s a very different business from the ‘Move fast and break things’ philosophy of Facebook.” — Sean Parker, Fortune, May 2018 13.

Parker on his continued involvement with music: “I spent years thinking about what I think is the right business model for selling music on the Internet.” — Sean Parker, Fortune, May 2018 13.

Sources

  1. “Napster Was Launched 24 Years Ago Today On June 1, 1999,” 93.3 WMMR, June 2023. https://wmmr.com/2023/06/01/napster-was-launched-24-years-ago-today-on-june-1-1999/↩

  2. “History of Napster, Inc.,” FundingUniverse, accessed March 2026. https://www.fundinguniverse.com/company-histories/napster-inc-history/↩↩↩↩↩↩↩↩

  3. “Shawn Fanning | Biography,” EBSCO Research Starters, accessed March 2026. https://www.ebsco.com/research-starters/biography/shawn-fanning↩↩

  4. “Who are Napster’s founders, who changed music forever?,” Soundiiz Blog, accessed March 2026. https://soundiiz.com/blog/who-are-napsters-founders-who-changed-music-forever/↩↩

  5. “What Happened To Napster?,” ProductMint, accessed March 2026. https://productmint.com/what-happened-to-napster/↩↩

  6. “Best Buy acquires Napster for $121 million,” Music Ally, September 2008. https://musically.com/2008/09/16/best-buy-acquires-napster-for-121-million/↩

  7. “Breaking: Rhapsody to buy Napster from Best Buy,” GeekWire, October 2011. https://www.geekwire.com/2011/breaking-rhapsody-buy-napster-buy/↩

  8. “Hivemind and Algorand buy Napster,” MusicTech, May 2022. https://musictech.com/news/hivemind-algorand-buy-napster-revolutionize-music-industry/↩

  9. “Napster acquired in $207m deal by Infinite Reality,” Music Business Worldwide, March 2025. https://www.musicbusinessworldwide.com/napster-acquired-in-207m-deal-by-12-25bn-valued-tech-startup-infinite-reality1/↩

  10. “Silicon Valley investing legend Ron Conway on the lessons learned from Napster,” Fortune, December 2020. https://fortune.com/2020/12/02/ron-conway-sv-angel-napster-google-facebook/↩↩

  11. “VC pumps $15m into Napster,” The Register, May 2000. https://www.theregister.com/2000/05/22/vc_pumps_15m_into_napster/↩↩↩

  12. “EMI Sues Bertelsmann Over Napster,” Billboard, accessed March 2026. https://www.billboard.com/music/music-news/emi-sues-bertelsmann-over-napster-70746/↩

  13. “Q&A: Sean Parker on Napster, Spotify, and His Federal Tax Law Triumph,” Fortune, May 2018. https://fortune.com/2018/05/25/sean-parker-napster-spotify/↩↩

  14. “Ashes to ashes, peer to peer: An oral history of Napster,” Fortune, September 5, 2013. https://fortune.com/2013/09/05/ashes-to-ashes-peer-to-peer-an-oral-history-of-napster/↩↩↩

  15. “2000: The Napster Monster and Apple’s Heavenly Jukebox,” Cybercultural, accessed April 2026. https://cybercultural.com/p/napster-itunes-2000/↩↩

  16. “Napster nips $15 mil in funding; Barry CEO,” Variety, May 23, 2000. https://variety.com/2000/digital/news/napster-nips-15-mil-in-funding-barry-ceo-1117781970/↩↩↩

  17. “Napster, BMG sign music pact,” CNN Money, October 31, 2000. https://money.cnn.com/2000/10/31/bizbuzz/napster/index.htm↩↩↩

  18. “Bertelsmann and Napster Form Strategic Alliance,” Streaming Media, October 31, 2000. https://www.streamingmedia.com/Articles/ReadArticle.aspx?ArticleID=63333↩↩↩