RealNetworks to lay off 4 percent

The Seattle area is going to get another jobless jolt Thursday, with RealNetworks planning to lay off 4 percent of its workforce, sources said.

That's a small number--just about 70 people out of its 1,700-person staff--but the move comes on the heels of layoffs of another 800 employees at nearby Microsoft on Wednesday. The software giant has cut thousands of jobs over the last year, part of a move to eliminate 5,000 positions by mid-2010.

While the dismissals--which are likely to be announced to affected RealNetworks employees sometime Thursday morning by managers--will be global, both RealNetworks and Microsoft are tech leaders with headquarters in the Pacific Northwest.

According to sources, the reasons for the layoffs at RealNetworks are, as was the case at Microsoft, to realign the work force after the recent economic downturn and to control costs.

But RealNetworks could also hire back some of the laid-off employees, as other parts of the company are expanding.

The company had signaled the possibility of staff cuts previously, but had not been specific.

The last staff cuts at the company, which makes digital media software and tools, were larger, with about 130 employees sacked about a year ago.

RealNetworks announced better-than-expected third-quarter earnings last week, barely returning to profitability by cutting costs to make up for weaker revenue.

(Digital Daily's John Paczkowski contributed to this report.)

Story Copyright (c) 2009 AllThingsD. All rights reserved.

[joshmaher]

Don't forget the Classmates.com layoffs (17% of their workforce) this week as well...

http://www.techflash.com/seattle/2009/11/classmates_confirms_layoffs.html?ana=from_rss

Definitely a lot of new unemployed workers in the Seattle area this month

[ibeetle]

In connection with the news last week about how dismal Rhapsody is doing this news is should not really be a big surprise.

Less than 800,000 active paid accounts a 10% drop over this time last year; which was a drop in its self over the year before that. Time to stick a fork in your music service Real it's done.

[corykleinschmidt]

There has been endless discussion of Rhapsody's fate before, and it always leaves me puzzled.

I fail to see how Rhapsody is done for. It's the only streaming music service that allows you to a limitless buffet of music, and now with Rhapsody to Go being ported to the iPhone, Rhapsody should really be able to spread its wings.

People always wonder why anyone would want to rent your music and not own it. Well, for the cost of one CD each month, I discover at least 5 or 6 new albums and artists I had never heard of before. If I were paying for each track on iTunes, I would have had to spend about $10k over the past 8 years that I've been a Rhapsody subscriber, instead of the $1,500 or so I've spent on subscription fees.

For web workers like me who sit at a desk for 8 hours every day, Rhapsody is simply a godsend. The problem, it seems to me, is that RealNetworks has done a lousy job of marketing Rhapsody. If they were to make a compelling case to music junkies like me and really show why the economics of renting trump the supposed reassurance of owning your music, they would have no problem competing with iTunes.

[servermaker]

could not agree more - I am a daily user of Rhapsody. I too sit at a keyboard for umpteen hours a day; and having a nearly infinite library of music available to me is worth the price of admission.

[srminton]

One reason it has never 'spread its wings' is because of DRM. Most people like to listen to their music wherever and whenever they want. I know there's that Rhapsody to Go thing, but it's crippled by DRM. I signed up for it years ago when I was using a Palm Treo, and happily set off on a trip to Europe only to discover at the airport that all the music I'd downloaded was useless because I got an error message saying that my rights had expired (despite having just downloaded the music that day). It's little experiences like this which have taught people to stay clear of anything which has DRM stamped across it. As a purely streaming service, meanwhile, it's competing with free offerings like Pandora and online radio. I know you can choose your own playlists more easily in Rhapsody, but that seems to be a feature which people aren't willing to pay for vs. the free streaming music on offer from alternatives like Pandora.

[dragonsky1]

People say Rhapsody is one because they are continuing to loose money and subscribers every month. It's pretty simple. Not to mention, the amount you use the service really dictates how much value you get out of it. I have gone months without downloading any new music from iTunes or Amazon, so those months I would have got little from the service, other than listening to music I could have already bought.

Also, Rhapsody isn' the only service that works like this. Napster is identical, and has the backing of Best Buy. Rhapsody has continued to hemorrhage subscribers ever since loosing it's retail partner. It isn't that they have poor marketing, they just have limited means for it. I have seen a lot more Rhapsody commercials, than those for any other music service, save iTunes.

[aMUSICsite]

Wow Real are still in business!

[Sandy8937]

RealNetworks is a notoriously poorly managed company, and like death and taxes, you can always count on a yearly holiday season layoff by the yahoos who happen to be in charge at the time. I've never worked there, but his company is such a joke in Seattle, and most people in this town see the company as a joke due to the notoriously bad leadership, amateurish business practices and their "oooh, look, it's a bright, shiny object!" business model. As a Rhapsody subscriber, it makes me sad to think that these guys are in charge of running it into the ground.