iHollywood Newsflash: Real Launches Web-based Rhapsody

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.