New Subscription Challenge to Music Downloads
12.05.05
Real Networks will today announce a web version of its Rhapsody subscription music service, along with a campaign to allow any consumer to stream up to 25 songs for free per month over the Internet.
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The Seattle-based company will also unveil a "toolkit" to allow bloggers and website owners to integrate Rhapsody songs and RSS feeds into their sites. Rollingstone.com will be among the first to do so. Comcast, which already offers its high-speed Internet customers a version of Rhapsody, is another partner.
One-time Real nemesis Microsoft Corp. will integrate Rhapsody into Windows Media X in the weeks ahead and plans to integrate Rhapsody into MSN Search, MSN Messenger and MSN Music.
The moves are a bid to dramatically expand Rhapsody's services from a relatively small subscriber base of just over 1.3 million subscribers to a much broader audience. They also mark the growing ascendancy of the web for distributing all types of content -- from streaming video to Gmail.
For the music business, the enhanced service, Rhapsody.com, enhances the appeal of subscription services that allow consumers to rent music rather than buy it outright. The service will be available to most people with web browsers, including Apple and Linux users.
"We think there will always be a role of downloads," said Dan Sheeran, Real's senior vice president of music and video. "But as consumers get all the benefits without the hassles, the jukebox-in-the-sky will become the primary way consumers access music in the home."
Apple's iPods won't run Real's music format, so the new service is an end-run around Apple Chairman Steve Jobs attempt to lock out songs encoded in Real's format. And since Linux runs on many electronics products, the Rhapsody service could be integrated into settop boxes, network-connected digital video recorders and other digital devices.
The service complements the company's Rhapsody To Go service, which allows users to rent downloads that they play on portable devices. Users pay a monthly fee of $9.99 for unlimited downloads instead of paying per song. They must continue to pay their monthly fee and synch their portable device with their computer each month, however, or the songs become unplayable. Rhapsody-to-Go costs $14.99 a month.
Until now, Rhapsody subscribers have had to download software to their computers in order to use the service. The new service means they can access the songs from most computers with web access.
Yahoo! and Napster.com have competitive music subscription service that cost less than Rhapsody.com. Those services, however, require users to download software before consumers can use them.
Real launched an initiative to allow consumers to stream 25 songs a month for free last April that still required consumers to download the Rhapsody software. The company hopes the new web-based service will persuade website owners and bloggers to incorporate Rhapsody songs and technology into their own sites.
Since Real compensates labels for each song consumers stream, the new service is a calculated risk that enough consumers will sign up for Rhapsody.com to justify the potentially hefty fees.
"We've done a lot of modeling, and we're positive this will be an ROI positive investment," Sheeran said.
Real Networks Chairman and CEO Rob Glaser will demonstrate the new service at iHollywood's Digital Living Room conference today in Foster City. Real Networks is a sponsor of the conference.
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2 comments:
Hello Michael,
I don’t agree with a couple of points in your article on the Sony BMG Fiasco.
The notion that Sony has a right to sell CD’s with a designed defect in order to limit my right to copy a CD for my own use is just plain wrong.
This represents an assumption that I am guilty of bootlegging or illegal file sharing, whereas there is an assumption of innocence under both U.S. and Canadian law (yes, they made the same bone-head mistake in Canada as well.)
Furthermore if Sony BMG knowingly sells me a product that will affect the software in my computers in any way, and they don’t clearly inform me that they are doing so, they committing a tort, not unlike trespassing.
They can come up with any excuse they want but there is no moral justification for what they did. (I should mention I have worked in the record industry for over 30 years and at a fairly high level for the past 20 years.)
I also find fault with your suggestion that they should add value with non-sense like the Dual Disc. If somebody wants a 24-bit CD that’s fine but the overwhelming majority of consumers do not want this, and it is ridiculous that Dual Disc product is replacing (as opposed to augmenting) the existing 16-bit CD that has been around for over 20 years.
Major record companies have problems alright but pushing around consumers will only make matters worse.
Major record companies have focused on singles by celebrities at the cost of focusing on albums by artists. However the huge problem is that in the digital world, copyright protection is a nightmare and this applies to all media. The smart thing for major record companies to do would have been to embrace file-sharing and monetize it. They could have 35,000,000 North Americans paying $12.00 a month for “all they can eat”, and generate an additional 5 billion dollars a year. (And current CD sales would be more likely to increase than collapse.) Instead they want to charge more than the $0.99 that iTunes has established for a single and they watch the millions trickle in as they slowly go broke. I think the reason they didn’t go down that road is a) they have no faith in the true popularity of music, and b) they are indoctrinated to believe that catalogue sales are nothing more than a cash grab and they stubbornly maintain that the real money is in finding the next Michael Jackson (i.e their business model is totally unrealistic.)
Record companies could radically increase revenues and profits. They would then have to go into their general fund to develop new artists. This would require vision, planning, faith in the future, faith in music (and people’s love of music) and it may take a little time. Instead the majors haven’t been capable of thinking 2 business quarters down the line since the 70’s when the lawyers were in the legal departments, not the Presidents’ offices.
In a nutshell they lack vision and leadership. Instead they live in a climate of fear and despair.
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