May 27, 2003 9:00 PM PDT

Real pushes lower-cost Rhapsody

RealNetworks on Wednesday will cease selling the music-subscription service MusicNet in favor of one from Listen.com's Rhapsody, which also plans to charge a new low of 79 cents per track to rip CDs.

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The Seattle-based digital media company is introducing a co-branded subscription service called RealOne Rhapsody, a version of the popular digital-download music product from Listen to run only on Microsoft Windows-compatible machines. In addition, Listen is lowering the cost of CD-burning from 99 cents to 79 cents per track in a move to better compete against Apple Computer's new music-download service, iTunes, among others.

The RealNetworks' product is the first major development that postdates the company's proposed $36 million acquisition of privately held Listen in April; the buyout is expected to be complete by the end of the third quarter. It is also a visible sign that RealNetworks has opted to back Rhapsody as its music service of choice at the expense of MusicNet, the rival subscription service it helped create in 2001, and in which it is still part owner.

MusicNet is a joint venture between RealNetworks, Bertelsmann, AOL Time Warner and EMI Group; the service, despite a relatively recent update, has failed to catch on as swimmingly as Rhapsody. Listen licenses Rhapsody to a number of major Internet providers, including Cablevision Systems, Charter Communications and Verizon Online.

With MusicNet, "we were a technology vendor and partner and investor and retailer. After this, we won't be a retailer," said Dan Sheeran, vice president of marketing at RealNetworks. "We felt (we wanted to make) this as easy as possible, with one offering."

With RealOne Rhapsody, RealNetworks aims to round out and bolster its set of subscription services, which has more than 1 million subscribers.

For $9.95 a month, people will be able to access more than 330,000 digital music tracks on demand, with about 200,000 songs available for CD burning at 79 cents per song. The service also combines custom radio and custom-CD mixing features.

Rhapsody is promoting CD-copying by lowering the cost per track because music fans are keen on the capability. The company said it promoted CD-copying earlier this year with 49 cent tracks and found that CD-burning activity increased by more than 300 percent. At the same time, subscribers continued to listen to about 250 songs a month.

 

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