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: LinkedIn membership hits 300 million

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

LinkedIn membership hits 300 million

21 hours ago

The career-focused social network LinkedIn announced Friday it has 300 million members, with more than half the total outside the United States.

Researchers uncover likely creator of Bitcoin

Apr 18, 2014

The primary author of the celebrated Bitcoin paper, and therefore probable creator of Bitcoin, is most likely Nick Szabo, a blogger and former George Washington University law professor, according to students ...

White House updating online privacy policy

Apr 18, 2014

A new Obama administration privacy policy out Friday explains how the government will gather the user data of online visitors to WhiteHouse.gov, mobile apps and social media sites. It also clarifies that ...

User comments : 0

More news stories

Airbnb rental site raises $450 mn

Online lodging listings website Airbnb inked a $450 million funding deal with investors led by TPG, a source close to the matter said Friday.

Health care site flagged in Heartbleed review

People with accounts on the enrollment website for President Barack Obama's signature health care law are being told to change their passwords following an administration-wide review of the government's vulnerability to the ...

Impact glass stores biodata for millions of years

(Phys.org) —Bits of plant life encapsulated in molten glass by asteroid and comet impacts millions of years ago give geologists information about climate and life forms on the ancient Earth. Scientists ...