Rhapsody cuts monthly music plan to $10 at spinoff

Apr 06, 2010 By RYAN NAKASHIMA , AP Business Writer

(AP) -- Subscription music service Rhapsody is dropping its monthly price to $9.99 from $14.99, hoping that loads of iPhone users who sampled it will now pay for all-you-can-listen access.

Several companies have announced their intention to launch similar music plans that let people listen to songs that are stored on remote computers and streamed to their wirelessly. Such music services, based on so-called "cloud" computing, are challenging Apple Inc.'s system of having consumers buy and download tracks for playback on iPhones and iPods.

The subscription plans have yet to take off. But as cell phone networks have gotten faster and more capable of handling large amounts of data, more companies are beginning to offer cloud-based music services.

Apple itself is believed to be developing a cloud-based offering after its acquisition in December of Lala.com. That site lets people purchase songs to stream online from a digital locker for 10 cents apiece.

says it has an advantage over other subscription plans because it has an established user base - about 675,000 at the end of 2009. Also, it received about $51 million last week when it spun off from parents RealNetworks Inc. and Viacom Inc., although much of that money is earmarked for advertising on cable channels such as MTV and VH1.

Jon Irwin, the president of the newly independent company, Rhapsody International Inc., said the company plans to be profitable by the end of the year. Rhapsody has annual revenue of about $130 million but has seen its subscriber base fall from a peak of 800,000 in the first quarter of last year.

Sensing a shift in consumers' habits, recording companies have recently agreed to lower the royalty rates they demand from subscription services, in hopes of giving the services the potential to grow faster. Sales of songs on Apple's iTunes have yet to offset the decline in CD sales.

Rhapsody launched an iPhone application in September that allowed plays of some 9.5 million songs as long as the device was within cell phone or wireless Internet range. Although 1.5 million people downloaded the application, very few signed up to pay after the seven-day free trial period. Most users said the service was too expensive, Irwin said.

Current subscribers of the Rhapsody To Go service will be kept on the more expensive plan, which allows usage on multiple mobile devices, unless they opt to scale down to the $9.99 Rhapsody Premier plan, which works on only one device.

Rhapsody also is launching an application for smart phones that use Google Inc.'s Android operating system.

Explore further: Study: Social media users shy away from opinions

not rated yet
add to favorites email to friend print save as pdf

Related Stories

Rhapsody streaming app approved for iPhones

Sep 10, 2009

(AP) -- RealNetworks Inc.'s subscription music service Rhapsody has been approved for use on iPhones and iPod Touches, the first time Apple Inc. has allowed an on-demand music streaming program on its devices ...

RealNetworks, MTV to spin off Rhapsody

Feb 10, 2010

(AP) -- RealNetworks Inc. and MTV Networks said Tuesday that they plan to spin off Rhapsody America LLC, their digital music service joint venture, into an independent company.

Music blog to offer high-quality song streaming

Oct 14, 2009

(AP) -- Consumers seem reluctant to sign up for online music services that charge subscription fees, yet a music blogging site is hoping to reel in music lovers by offering unlimited access to a catalog of high-fidelity ...

Apple confirms purchase of music site Lala.com

Dec 07, 2009

(AP) -- Apple Inc. has purchased online music retailer Lala.com, a Silicon Valley startup that has threatened "the end of the MP3" with its fast song-streaming application.

Recommended for you

Study: Social media users shy away from opinions

Aug 26, 2014

People on Facebook and Twitter say they are less likely to share their opinions on hot-button issues, even when they are offline, according to a surprising new survey by the Pew Research Center.

US warns shops to watch for customer data hacking

Aug 23, 2014

The US Department of Homeland Security on Friday warned businesses to watch for hackers targeting customer data with malicious computer code like that used against retail giant Target.

Fitbit to Schumer: We don't sell personal data

Aug 22, 2014

The maker of a popular line of wearable fitness-tracking devices says it has never sold personal data to advertisers, contrary to concerns raised by U.S. Sen. Charles Schumer.

Should you be worried about paid editors on Wikipedia?

Aug 22, 2014

Whether you trust it or ignore it, Wikipedia is one of the most popular websites in the world and accessed by millions of people every day. So would you trust it any more (or even less) if you knew people ...

Philippines makes arrests in online extortion ring

Aug 22, 2014

Philippine police have arrested eight suspected members of an online syndicate accused of blackmailing more than 1,000 Hong Kong and Singapore residents after luring them into exposing themselves in front of webcam, an official ...

User comments : 0