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: Twitpic to stay alive with new owner

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

Facebook dressed down over 'real names' policy

Sep 17, 2014

Facebook says it temporarily restored hundreds of deleted profiles of self-described drag queens and others, but declined to change a policy requiring account holders to use their real names rather than drag names such as ...

Yelp to pay US fine for child privacy violation

Sep 17, 2014

Online ratings operator Yelp agreed to pay $450,000 to settle US charges that it illegally collected data on children, in violation of privacy laws, officials said Wednesday.

User comments : 0