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RealNetworks spins off Rhapsody music service as solo act

RealNetworks on Tuesday said it will spin off its Rhapsody subscription music service as a separate, privately held company.

The move, expected to be completed by March 31, is the first of several being planned by Real's management in Seattle in order to more tightly focus its business, which currently encompasses music, games, video and mobile messaging.

Bob Kimball, who took over last month as acting chief executive when the company's founder Rob Glaser resigned, is expected to articulate the company's streamlined plans on Thursday during the company's fourth quarter earnings announcement.

As the cornerstone of Real's digital music venture, Rhapsody has been struggling to compete with a slate of digital music services, including Napster and Microsoft's Zune. 

Perhaps a bigger roadblock for Rhapsody ambitions, however, has been its inability to persuade consumers to pay $12.99 a month for unlimited access to millions of songs, as Times editorial writer Jon Healey pointed out when Rhapsody rolled out its iLike feature.

Rhapsody had 700,000 subscribers as of Sept. 30. RealNetworks owns 51% of the venture, and Viacom's MTV Networks owns 49%. After the spinoff, Real plans to reduce its stake to less than majority share.

-- Alex Pham

Comments () | Archives (2)

I was a Rhapsody user for years.
Loved it. When you hear something on the radio and then can automatically listen to the entire album before buying...wow.
But...ultimately the internet hiccups, dropped songs and missing music eventually got to me (as did the low bit rate when I tried to hook the service up to my real Hi-Fi instead of just my computer).
If they were to offer real audiophile quality service I'd be back.
But for now...no.

Rhaposdy sounds fine to me on my home stereo thru a Squeezebox Duet and B&W speakers. The bit rate still beats ITunes.

Yes, there are glitches, happens to a lot of other software, too. The fault for missing songs can nearly always be blamed on factors beyond Real/Rhapsody's control.

Yesterday (and most Tuesdays)I was able to listen to 4 new albums from artists I'm interested in. If all you want to hear is contemporary popular music or music from an earlier decade, you're better off saving the whopping $15/mo(that allows me to listen to 8GB of Rhaposdy in my car via an MP3 player and my car stereo)and listening to radio anyway.

If you listen to music more than a few hours a day,listen to a lot of new music (I could listen to most of the more obscure SXSW bands before I went there) or are curious about older music you may have overlooked (All of Miles Davis' Columbia recordings on Rhapsody, my knowledge of classical is ten times what it was when I first subscribed) Rhapsody is easily worth the price.


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