Today In Music: Rhapsody’s added 100,000 new subscribers since April

January 20, 2011

JonIrwin1Rhapsody, one of the pioneers of music subscription services, has added more than 100,000 net new subscribers since the company was restructured in April President Jon Irwin (pictured, left) told Reuters. This means they’ve overcome  a long period of slow or no  growth during which its two major owners Real Networks and MTV Networks tried to figure out what to do with the business amidst the usual issue of conflicting agendas in  joint ventures.

As you may recall, last February both owners agreed to reduce their stakes by bringing in two major label owners Universal Music Group and Sony Music Entertainment as minority holders and also offered warrants to Warner Music Group and EMI Group. The company actively became independent in April.

Now with those closer relationships with the music business but more importantly its expansion through mobile platforms like the iPhone and Google’s Android platform, business is growing.  Irwin said Rhapsody has been adding as many customers as its key music subscription rivals have altogether– it now has around 750,000 subscribers. Last we heard a couple of years ago it was around 700,000-mark.

Rhapsody estimates there are around 1.5 million U.S. music subscribers giving it around half of the market. Last year Forrester Research forecast there were around 2.1 million music subscribers via the cloud  in 2010.

Irwin puts the recent success down to its new independence allowing for quicker innovation and also a better relationship with the music business. He said the company is now focused on being the best music service available and,  unlike in the past, labels now really get  it.

“The labels are looking forward to what’s going to make their business grow as CDs sales continue to fall and download sales flatten,” said Irwin.

As well as mobile being a key driver of growth, Rhapsody is also in talks with cable television companies to bundle the Rhapsody music service with high speed Internet connections.

Like with the wireless companies the key is ease of billing customers, the idea is the average customer is going to be less worried about an extra $10 on their phone or cable bill versus paying for it separately.

Rhapsody’s rivals in music in the cloud subscription services include Rdio, MOG and Napster among others. One new subscription competitor from Europe might soon be Spotify, who we’ve learned has finally signed up Sony Musicas its first major label partner in the U.S. Though our source hastened to remind us it doesn’t mean the Spotify launch is “super-imminent”. No kidding.

Back in July Forrester Research analyst Mark Mulligan had an interesting blog outlining some of the challenges and opportunities  this  small, but fast growing, sector of the digital music business will likely face:

  • Device adoption: most consumers don’t use many devices to listen to music.  In fact, most don’t use digital music devices at all.  Only a third use MP3 players and 10% music phones.
  • Rights issues: should a stream from a cloud copy of an already owned song count as fair use or a licensed stream?  Labels think the latter.
  • Connectivity issues: 3G speeds outside of urban areas resemble dial-up and Wi-Fi is far from ubiquitous.
  • Interoperability issues: rights managed cloud services will only work on supported devices.  But even ‘open’ offerings will only work on supported devices — e.g. Spotify won’t work on BlackBerrys.

(Photo: courtesy of Rhapsody)

Other stories  around the business side of music today:

– Music video site Vevo is the No.1 music website and No.3 entertainment site in the U.S. and Canada according to comScore’s December figures – press release.

– Sony Music Entertainment will use technology from Mobile Roadie to develop interactive mobile entertainment applications for its artists and labels – press release.

– Global revenue from digital sales and services grew by just 6 percent last year and the overall recorded music market shrank by between 8-9% in total according to the IFPI, story from Billboard

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