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Rhapsody losses deepen; is a turning point at hand?

Tuesday, November 12, 2013 - 12:45pm

Music service Rhapsody’s net revenue and gross profit declined in two year-over-year measurements, according to an SEC filing by joint-venture partner and former parent company RealNetworks. Net loss also deepened in both timeline comparisons.

Rhapsody separated from its subsidiary relationship with RealNetworks in 2010, and now RealNetworks owns 47% of Rhapsody.

Comparing the first nine months of 2013 with the same period in 2012, net loss deepened from nine-million dollars to nearly $15-million. Looking at just the third quarter, year over year, the net loss increased from $3.4-million to $5.6-million.

Rhapsody has had an eventful year. Following a leadership change and 15% staff layoff sweep in September, the company revived its app products in October, bringing them to parity (and, in some ways, beyond parity) with competing music service apps. Also in October, Rhapsody closed a meaningful international distribution deal with telecom giant Telefonica. The company has said it expects to expand its global footprint to at least 25 countries (from three countries pre-Telefonica) in the next 18 months.

Rhapsody gives a free month to CD buyers

Tuesday, October 22, 2013 - 9:15am

It makes sense. Put the new model where the old model lives. Try to bring in a new audience that might not have sampled competing services yet.

That’s what Rhapsody’s just-announced partnership with Best Buy is attempting. Anyone buying a (qualified) CD from Best Buy’s racks will be gifted with a month of Rhapsody’s subscription-only online listening/collecting platform. It’s a nice surprise for the buyer, and a bit of incentive that Best Buy can promote on its CD shelves. Rhapsody’s play is to drive a wedge into the CD consumers’ buying habits, introduce them to an access model that might be entirely new to them, and convert ‘em. In that context, Rhapsody and Best Buy are at cross-purposes.

Rhapsody competes most directly with the laboriously-named Google Play Music All Access, which likewise provides subscription-only service, with a cloud-storage component Rhapsody lacks. Among indies, Rhapsody is most often compared to Spotify and Rdio, both of which, in addition to offering premium subscriptions to avoid ads and enable downloads, provide a layer of free listening.

In recent months Rhapsody has suffered a management shake-up and sweeping staff layoff. Last week Rhapsody announced an international telecom partnership with Telefonica, for international distribution of its service in Europe and Latin America. (RAIN coverage here.)

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