RealNetworks (Nasdaq: RNWK ) has been gunning for Apple (Nasdaq: AAPL ) for quite some time, but today it announced a new subscription service connected to its Rhapsody music service that shows it's deadly serious about making headway in the market for electronically distributed music. Who exactly it's threatening is a whole other story, though.
The company proposes an all-you-can-rent price of $9.99 per month for subscribers and said it will offer 25 songs per month for free in an effort to woo new users to its for-fee services. For an additional $5.00 per month, music fans will be able to use Rhapsody To Go to buy songs and transfer them onto the music players of their choice -- as long as their choice is not Apple's iPod, which uses a musical format that Rhapsody doesn't support.
As much as this type of subscription service might be interpreted as an attempt to take some of the juice out of Apple's sales, one might surmise that the name this really affects is Napster (Nasdaq: NAPS ) , which provides such subscription services where music fans rent the music to listen to, as opposed to buying and downloading the tunes. And such music giveaways are by no means a new innovation -- Microsoft recently used the same tactic to try to win listeners.
I have to say, the press release seemed more than a bit convoluted with its varying number of tiers. I found it a little difficult to ascertain which tiers meant you were renting, buying, or what. It's also not too hard to imagine that maybe there was a little bit of snarkiness in the statement that the company "worked closely with the music industry to create a more flexible model for consumers to try Rhapsody for free." It reminded me of a recent Take I wrote about rumors of the music industry's resentment of Steve Jobs' power.
Seeing how Apple's iTunes service and its iPod music player have formed a pretty symbiotic relationship -- use of one ropes folks in to use the other -- the subscription services like RealNetworks' Rhapsody that provide unlimited music on demand may very well nibble around the edges of this market, where folks who choose lower-priced music players from sources other than Apple will compare amongst the services.
And, of course, the powerful aspects of first-mover advantage and the trendy-cool factor associated with the iPod might fly in the face of logic in the decision-making process, including things like price.
However, it's clear that the market for music is highly coveted, with the potential for plenty of growth -- and it's also clear that Apple's currently got a huge chunk of that market. More than 10 million iPods have already been sold, and there don't seem to be many signs that the product is falling out of favor yet. For all of RealNetworks' efforts to wave the battle flag, and its obvious will to try to change the field in its favor, the company, arguably, is still largely on the sidelines of the music war.
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Alyce Lomax does not own shares of any of the companies mentioned.
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