Rhapsody Keeps It Real -- for Paying Subscribers

It's not just Sirius XM Radio (Nasdaq: SIRI  ) that sees an opportunity in premium streaming on Apple's (Nasdaq: AAPL  ) iPhone and Wi-Fi-friendly iPod touch. RealNetworks (Nasdaq: RNWK  ) is submitting its on-demand streaming app so it can undergo Apple's notorious review process this week, according to the company's official blog.

Subscribers to RealNetworks' Rhapsody will be able to stream all of the 8 million-plus songs in the service's library through the app. Unlike Sirius XM's app -- with which subscribers pay between $2.99 and $12.95 for access -- the RealNetworks app is being made available at no additional charge to its paying members. Rhapsody To Go subscribers who are already paying $14.99 a month for the service will simply have one more appliance to access their queues, saved playlists, and personal libraries.

This is obviously great news for current Rhapsody subscribers with iPhones, but will it help drum up new leads? Doing so won't be easy. App Store shoppers appear to be a thrifty bunch. The most popular applications are the ad-supported freebies. When they do shell out for a download, it's typically a one-time $0.99 purchase.

Sirius XM knows this all too well. It was quick to brag about notching a million downloads within its first two weeks of availability. However, when it came time to respond to how many of those free downloads are resulting in paying subscribers, CEO Mel Karmazin broke out the fire hose.

"The numbers -- and breaking it down -- is not something that we're doing," he noted earlier this month, during the company's second-quarter conference call. "You should not consider them to be a very significant number related to our number of subscribers."

Rhapsody is going to have an even trickier challenge, because at least Sirius XM offers more than just music. Rhapsody's ability to check out the latest music charts guarantees fresh music, but it's still competing against ad-supported App Store favorites Pandora, Slacker Radio, Yahoo!'s (Nasdaq: YHOO  ) Y! Music, and CBS' (NYSE: CBS  ) Last.fm.

The silver lining is that Rhapsody has been battling against these same sources of free Web radio for years, and it has survived as a premium service. It's also been at the forefront of convergence. It turned heads when its service became available on TiVo (Nasdaq: TIVO  ) boxes two years ago.

RealNetworks also has to be commended for following the Netflix (Nasdaq: NFLX  ) roadmap. It doesn't charge extra for streaming, yet it continues to expand the breadth of consumer devices that can do exactly that.

This service may not help land too many new subscribers, but it's a great way to retain the Rhapsody fans it already has. 

Other ways to keep it Real:

Apple and Netflix are Motley Fool Stock Advisor recommendations. Try of our Foolish newsletter services free for 30 days

Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He owns shares in Netflix and TiVo and is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


Read/Post Comments (11) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 24, 2009, at 12:29 PM, MaBellIsDead wrote:

    " make a bundle quickly and assuredly" sounds like a scam phrase. Get real.

  • Report this Comment On August 24, 2009, at 12:49 PM, Joelshann wrote:

    In 2005, I added RNWK to my watchlist--having been recommended as a stellar stock "Under $10." It was pulling $5 and some change, upwards to $6 plus in the next 18 months.

    Sitting at just over $3 is either a great buy...or another under-performing dud.

    Thanks, but I'll pass.

  • Report this Comment On August 24, 2009, at 1:07 PM, siri4life wrote:

    You praise them for trying to keep the existing subs but rip sirius. You have no shame showing your agenda. Nice job . this piece should win you a nobel.

  • Report this Comment On August 24, 2009, at 1:11 PM, siri4life wrote:

    "This service may not help land too many new subscribers, but it's a great way to retain the Rhapsody fans it already has." ---- Where is the part that you congratulate sirius for thinking of this first.

    "Unlike Sirius XM's app -- with which subscribers pay between $2.99 and $12.95 for access" --This is B.S. If you already subscribe it's free duech bag.

    "Rhapsody To Go subscribers who are already paying $14.99 a month for the service will simply have one more appliance to access their queues"

    ---- Where is the part that you congratulate sirius for thinking of this first.

  • Report this Comment On August 24, 2009, at 5:27 PM, jimmylegg wrote:

    Its all in his wording, anything to insert SIRI in an article to get volume and readership...funny how I never see MF on any other news alerts...still pluggin away at making it seem like RN is free, oh of course if you pay 14.99...beginiing to wonder if this guy lost his shorts in 2000 with stock....

    Poor thing....

  • Report this Comment On August 24, 2009, at 9:41 PM, dvillone1 wrote:

    You are a loser. These guys have posted the reasons why. Since you bashed Sirius today they lost 4-5% on their stock price gain for the day just because of your asinine comments. Leave they alone and see if you know anything about anything. You obviously don't You are just an idiot.

  • Report this Comment On August 25, 2009, at 7:43 AM, doorcorp wrote:

    Aristotle,

    Whats up with the stage name dude? You proud yet?

  • Report this Comment On August 25, 2009, at 9:48 AM, Punkman69 wrote:

    Whenever I read a SIRI article from MF, it's always in the context of the current players in the market. The ones still trying to figure out the highest margin models, however they all spend a boat load of money trying to get a fraction of a percentage improvement. As soon as the likes of AT&T, Verizon, Sprint, and all the network capable companies develop a radio strategy, all the current players become non-factors...why? The afforementioned companies will make the internet accessable to all in your car and all the free sites will be at your finger tips. No need for a paid subscriptions, at all. There are a ton of good stations now. When that happens, and it's almost here, the rules will once again change and the likes of Sirius (avail in cars now) and Rhap will scramble to remodel. Sirius just doesn't get it. They actually believe the world is theirs for the takin'. You all shall see...stay tuned.

  • Report this Comment On August 25, 2009, at 11:36 AM, JWILLI44 wrote:

    "Unlike Sirius XM's app -- with which subscribers pay between $2.99 and $12.95 for access -- the RealNetworks app is being made available at no additional charge to its paying members. Rhapsody To Go subscribers who are already paying $14.99 a month for the service will simply have one more appliance to access their queues, saved playlists, and personal libraries."

    i hate to sound like a SIRIUS XM groupie, but this article is obviously biased toward rhapsody. Unlike SIRIUS XM this app is no charge? They are paying $14.99!!!!Sirius XM says the same thing, the iphone app is free to subscribers with premium internet radio!!!They don't charge for the iphone app, they charge extra for the premium streaming at 128 kbs...Do the math..$12.95 + $2.99 =$15.94....Ok, so SirusXM charges $.99 cent more!!!(pay in advance and you can easily save and make it cheaper than rhapsody) So, for $.99 more you get internet access, iphone/ipod touch access, and satelite in your car!!! I won't even discuss content as that is debatable as far as which is better, (SIRIUS XM HAS MORE THAN MUSIC). But, to make it sound like Rhapsody does not charge and Sirius XM does is a flat out lie. The app is free to Sirius XM subscribers with premium internet streaming. Now, when Sirius XM after about a month says there are not a significan gain in subsribers it is a negative in your article. Then, you spin it and say Rhapsody will use theirs to retain customers!, not to attract new ones? That is the same thing Mel Karmazin said!! He never expected it to get many new subs, just help to retain current ones! ...Last...try taking your iphone or ipod touch with RHAPSODY on a long drive and listen to streaming music that you get at no charge on your ipod...after you pay $14.99 a month...lol.. ...i challenge anyone to do this and keep a clear signal on a long drive!!! Now take the sirius xm with sky dock and do the same thing...easy sailing anywhere in the country...and oh...for $.99 more you get comedy, talk, news, sports, etc...nationwide! Don't forget to use RHAPSODY you will need an unlimited plan which is over $30.00!!!Oh, I guess the data plan is free after you pay it every month?lol...FOR SIRIUS XM WITH SKY DOCK...NO DATE PLAN NEEDED......IPOD TOUCH WILL BE ABLE TO GET SATELITE NATIONWIDE IN CAR WITH DOCK...IPOD TOUCH WITH RHAPSODY OUTSIDE OF HOME? NO!!! ...OH...but RHAPSODY doesnt charge for the app....after you pay your $14.99 bill........you just have to pay $.99 less than SIRIUS XM and then make sure you have unlimited Data, and you have 3g service for your drive....By the way...RHAPSODY Have 18 million subs? Why not mention how most people won't pay $14.99 for music when they can download it for free! Listen to Pandora for free! THEY ARE ONLY MUSIC...I tried the service, I can get the same thing for Free!!!its only music!!!

  • Report this Comment On August 25, 2009, at 11:44 AM, mikecart1 wrote:

    This site is going down the tubes. Call this site Sirius 24/7 since that is what most of the articles are about. One would assume that based on why this site was created, it was to discuss a wide range of stocks outside of those focused on other main sites. Instead it has turned into SIRI everything.

    Thanks Rick for being the worst writer on this site. You're #1 at that!

  • Report this Comment On August 26, 2009, at 10:58 AM, JamesRobertDobbs wrote:

    "Unlike Sirius XM's app -- with which subscribers pay between $2.99 and $12.95 for access -- the RealNetworks app is being made available at no additional charge to its paying members."

    Huh? I thought that if you were already a paying Sirius subscriber, you could use the Sirius app at no charge?

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