The Seattle-based RealNetworks is offering Rhapsody Radio as an option on seven advanced cellular phones offered by Sprint, based in Overland Park, Kan. The service offers a wide variety of streaming music stations that cover genres ranging from alternative rock and country to pop and rap. In addition, the service also offers streaming podcasts from public radio station KCRW, a Santa Monica, Calif., station known for its eclectic musical format.
In the music subscription market, RealNetworks's toughest competitor is Yahoo Inc. which this year launched its own desktop service at less than half the price of RealNetworks. Both companies offer unlimited music for listening and downloading to a digital music player. The music, however, cannot be burned to a CD or will expire, if the subscription is not maintained.
While both companies offer similar services, RealNetworks provides higher sound quality, and its software is easier to use. Both companies also offer buy-to-own music, with RealNetworks, and other subscription services, charging 99 cents a track and Yahoo charging 79 cents a track.
Subscription music services are expected to surpass buy-to-own music by 2009, when revenues are expected to be $900 million and $800 million, respectively, according to JupiterResearch.
RealNetworks is heavily focused on the music subscription market. "We certainly believe that this is a model that works for customers," Kevin Nakao, general manager for mobile services for RealNetworks, said.
RealNetworks, which has more than 1.15 million subscribers to its PC-based subscription service, has found that people choosing rent-a-tune services tend to prefer the option of being able to listen to a wide selection of music, including new artists, without making the commitment to buy a track or album.
As a result, RealNetworks is moving as much of its Rhapsody desktop service to handsets as possible, and adding unique mobile services. For example, the Sprint offering enables subscribers to play rap beats without vocals through their phones' speakers, so they can make up their own lyrics and sing along, karaoke style. RealNetworks believes the feature will be a hit among teenagers.
"Kids hanging out outside waiting for the buss, showing off, can start rapping to this stuff," Nakao said. "It's a creative tool."
Sprint will include the Rhapsody Radio service as an option that subscribers can sign up for. Sprint will add $6.95 a month for the service on the phone bill, plus separate data charges. The service has been built for the Sprint network, so it can be accessed without the need to download software, Nakao said.
In four years, music downloaded from the Internet, either through individual purchases or subscription, are expected to account for 12 percent of the $13.5 billion consumers are projected to spend on music, JupiterResearch says. In 2003, music downloads accounted for one percent of the $12 billion spent on music.
Apple Computer Inc.'s iTunes music store remains the market leader in buy-to-own music. While the company hasn't launched a subscription service, many experts believe it will have to eventually.