Subscription music pioneer Rhapsody was spun out from joint owners RealNetworks and Viacom in April, and it immediately declared its independence by dropping the price of its mobile service from $15 to $10 per month. Since then, the service has introduced offline playback to its iPhone application--critical, if you want to be able to get the most out of your subscription while on AT&T's notoriously flaky 3G network--and successfully launched an Android version, which will be getting offline playback shortly.
Tomorrow, the company is set to announce that it's moving its streaming service from several data centers owned by RealNetworks to a single facility leased from managed-hosting provider Internap. Plumbing isn't very sexy, but Internap has some interesting technology that allows it to offer a 100 percent uptime guarantee--among other things, it monitors the big Internet backbone providers for latency and outages, and automatically reroutes traffic accordingly.
Ideally, Rhapsody customers won't notice the transition, which will take place over the next few months, but Rhapsody President Jon Irwin said it would help reduce the company's costs. That's critical, if Rhapsody wants to survive.
The company must be experiencing some bittersweet vindication--after pioneering legal subscription-based music in 2001, and almost being written off for dead last year, Rhapsody has watched as subscription services are suddenly being hailed as the savior of the music industry. Unfortunately for the company, newer services like MOG, Spotify, and Rdio are grabbing much of the attention.
I asked Irwin how he expects to compete with these newcomers, and he pointed out that Rhapsody's longevity has given it a sizable user base and revenue, and longstanding relationships with content providers--Rhapsody has licensed content from all four major record labels and more than 500 independent labels, giving it a library of more than 10 million songs. Content owners trust Rhapsody, which is why they were willing to go along with its price cut.
Equally important, Rhapsody has strong relationships with companies that provide "end points" for the service, such as Verizon Wireless, TV maker Vizio, DVR pioneer TiVo, and multiroom audio provider Sonos. The goal: to give users access to a massive storehouse of tunes on as many devices as possible. If Apple's iTunes ever goes subscription, you can bet that it'll be for iPhone and iPod only. Microsoft's Zune Pass works only with the Zune and forthcoming Windows Phone 7 platform. Whatever Google comes up with will probably be for Android. Rhapsody, in theory, could be everywhere.
Commenting on subscriber numbers, which have fallen from about 800,000 in 2008 to about 675,000 by the end of 2009, Irwin said the subscription price drop had reversed the slide and that the company had been steadily adding subscribers since then.
Updated 11:30 a.m. Oct 2: For this week's TechFlash Podcast, I had a fun 35-minute conversation about digital music with host Todd Bishop and Rhapsody chief product officer Brendan Benzing. We discussed subscriptions, Apple's ill-conceived Ping launch, and the 800-pound gorilla: Google. Check it out.