Napster is back—and it’s betting big on holographic avatars

Copyright lawsuits and ethical debates have led some to say the AI industry in its “Napster era.” Now, Napster itself is now reentering the chat with its own AI bet.

Last month, the former dot-com darling launched a conversational AI platform with dozens of “AI companions” trained with topical expertise to help users learn, collaborate, create, and problem-solve. Napster also unveiled the View, a 2.1-inch display that attaches to a laptop as a “second screen” for two-way 3D holographic video chats.

Unlike in the ’90s, the file-sharing pioneer is no longer a first mover. The nostalgia-laden brand joins an already crowded field of AI agents and competing devices from both giants and startups.

Napster’s platform used frontier AI models from OpenAI and Gemini to develop a new “large persona model” (LPM) trained on 30 psychometric characteristics mined from organizational psychology, says Napster chief technology officer Edo Segal. Each companion embodies some sort of profession as a topical expert, along with therapists, doctors, nutritionists are chefs, architects, engineers, and educators. Business-minded offerings help with everything from financial planning and tax strategy to legal issues and public policy.

The goal is to allow users to explore endless customizable personalities, each with distinct voices, Segal tells Fast Company: “We’ve made it possible to effectively explore building these endless universes of these personas.” Napster’s platform is based on tech developed by Touchcast, a startup founded by Segal that Infinite Reality acquired for $500 million this spring.

AI comparisons to Napster’s early woes aren’t lost on Napster execs. Segal says it’s an apt metaphor, adding that early clashes with the music industry echo more current debates about how tech giants control consumers’ content, data, and audiences. Decades later, Napster wants to be seen as an ethical alternative to Big Tech. One way it’s doing that: Promising users it won’t share, well, or wall off their data or audiences.

“There was a lot of controversy around what Napster did, but you can’t argue it wasn’t user-focused,” Segal says. “At a time like this, with AI’s profound impact on society, it’s useful to have a brand with a north star that puts the user first. . . . That’s the important lesson to take. Obviously, we don’t want the outcome to be similar to the last time around.”

Gartner expects 80% of enterprise software to be multimodal by 2030, up from less than 10% last year. However, analysts predict a third of AI video generation providers could fail by 2028 because of reputational, ethical, and legal issues.

Napster’s plan involves letting people create and customize new avatars or even make one in their own likeness. It’s already working with London’s Imperial College, where professors can create avatars for students to talk with outside office hours that come with transcripts of interactions afterward. Another early adopter is the Portuguese soccer league Benfica, which created an immersive 3D version of its e-commerce site and a way for fans to chat with an AI Companion about the team, jerseys, and related topics. 

“What makes people feel heard and seen?”

Napster’s AI pivot is the latest in a series of attempts by various owners to ride its brand cachet during emerging tech waves. In March, it sold for $207 million to Infinite Reality, an immersive digital media and e-commerce company, which also rebranded as Napster last month. Since 2020, other owners have included a British VR music startup (to create VR concerts) and two crypto-focused companies that bought it to anchor a Web3 music platform.

Napster’s launch follows a growing number of attempts to drive AI adoption beyond smartphones and laptops. Startups like Humane, Rabbit, and Bee have either flopped or at least failed to gain much traction. Giants like Meta and Google are moving forward with their AI-enabled smart glasses. (And then there are other still secret projects like whatever OpenAI’s making with former iPhone designer Jony Ive.)

What makes Napster think it can succeed where others haven’t? Part of the strategy is charging people a low subscription fee starting at $19 per month or to bundle it with the Napster View for $199. The trick is moving Napster beyond its music legacy. 

Some experts are skeptical if holographic avatars are even needed. Voice and text will see adoption much faster unless there’s a specific need for video, says Gabo Arora, founder and CEO of the immersive tech startup Lightshed.

“That’s the crucial thing,” says Arora. “You know it’s fake, but you don’t want to feel too self-aware of this. The broader thing with all this is that we are now in the intimacy economy. What makes people feel heard and seen and connected?”

Despite its controversial origin story, Napster still was a “really good brand” known for being disruptive and innovative, says Napster president and chief marketing officer Karina Kogan. Infinite Reality had spent years buying companies related to AI, virtual reality, and other metaverse-related industries. After buying Napster, it seemed like a way to unite them all under a recognizable name.

“[Napster’s brand] feels like an accelerant to getting us into the market versus trying to build a lot of equity into Infinite Reality,” Kogan says. “As a marketer, the challenge is which challenge would I rather take on: Is it harder to drive awareness or change perception? . . . How do we make people experience Napster as more than a music service or more than what it was like 20 years ago?”

“We have a massive product road map”

While Napster is selling the idea of customizable AI avatars as helpful, the reality is more nuanced. While some researchers have found people resist the AI broader companion category for its lack of inauthenticity, other recent findings suggest AI companions can reduce loneliness. 

There’s still growing concern that constant AI conversation could dull critical thinking, foster dependency, provide inaccuracies, and even lead to disturbing psychological effects. When asked about its plans for adding safeguards to protect users, execs say they have bans in place against certain types of harmful answers. Chats also come with a disclaimer that says “AI can make mistakes. Check important info.”

Whether people even want an infinite array of options to choose from is a question. Companies tend to drive adoption of new tech by copying platforms that have worked in the past, says Samantha Wolfe, a professor at New York University who teaches a class on AI avatars. She thinks Napster’s platform seems almost like an app store—instead of merely creating AI avatars to chat with based on celebrities or other parasocial relationships. 

“It feels like they’re skinning AI applications,” says Wolfe. “It’s nice having apps on your iPhone in a way that each has its own expertise. [Napster’s AI Companions] are like they’re all individual people-apps.”

Voice capabilities could strengthen interactions with AI companions, says marketing professor Stefano Puntoni, codirector of the Wharton Human-AI Research at the University of Pennsylvania. He also notes research suggests anthropomorphic cues can influence customer responses. 

“People often avoid adopting AI companions because they don’t believe that these are ‘true’ relationships,” says Puntoni, who studies the ways AI chatbots impact on areas like loneliness and consumer habits. “The interesting thing is that at the same time, people do acknowledge that AI can fulfill many of the concrete aspects of relationships.”

Knowing if people want holographic AI experts could determine Napster’s ability to find a niche through its new metaverse-minded home. It’s also just one of Infinite Reality’s many bets: In the past year, it’s spent at least $1 billion buying companies specializing in generative AI (Touchcast), avatars (Action Face), game development (LandVault) and spatial web experiences (Ethereal Engine). The challenge will be tying it all together.

“We’re putting products into the market and looking for feedback and signals,” Kogan says. “Sometimes the thing you think is going to hit isn’t the thing that hits . . . There’s obviously more strategy behind our decisions. We have a massive product road map.”

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