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Rhapsody takes a stab at iTunes
The leading subscription music Web site, Rhapsody America, will sell songs for 99 cents and albums for $9.99 to compete with iTunes.
Published: 07/01/08   1:00 am   |   Updated: 07/01/08   6:43 am
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SAN FRANCISCO – Rhapsody America, the Web’s top subscription-based music service, opened a digital download store Monday, becoming the latest company to challenge the dominance of Apple Inc.’s iTunes.

Like other recent challengers – and unlike iTunes – the Rhapsody MP3 store will feature songs from the four major record labels that aren’t constrained by anticopying measures. Apple has such music, which works on any digital music player and can be copied an unlimited number of times, from only one major label.

The store from Rhapsody America, a joint venture of RealNetworks Inc. and Viacom Inc.’s MTV Networks, offers another indication that the music industry, in its struggle with Apple over the pricing of music, is cultivating a new breed of Apple competitor.

Rhapsody plans to charge 99 cents for a single and $9.99 for an album, the same as iTunes.

One of Rhapsody’s selling points, however, is that customers will be able to listen to an entire song before purchasing it. ITunes gives customers a 30-second sample.

Amazon.com Inc. and Napster Inc. both opened digital download stores in the past year, selling music without copyright protections. In the past, the music industry has required digital locks on songs to make it harder for music to be copied and passed around on the Internet.

But consumers have been frustrated with the limitations of those protections, which restrict the number and kinds of computers and devices upon which music can be played.

In May 2007, Apple broke new ground when it began selling music without copyright restrictions from the EMI Group. But it hasn’t been able to strike similar agreements with the other three major labels, which are in a struggle with Apple over its resistance to offering variable pricing on music.

With its new store, Rhapsody is now “better positioned to compete with the other stores and with iTunes,” said Susan Kevorkian, program director of consumer markets for research firm IDC.

To promote the launch, Rhapsody is offering a free album to each of the first 100,000 people to create accounts before Friday.

Rhapsody also planned to announce Monday that it will supply streaming music services and download stores on other Internet sites and services, such as Yahoo Inc., MTV and the popular social networking service iLike.

James McQuivey, a media technology analyst with Forrester Research, said Rhapsody offered something different in the digital music marketplace: a chance for users to both stream and buy music.

“ITunes is so big. How do you beat them at their game?” McQuivey said. “From Rhapsody’s perspective, you don’t. They are trying to create a unique position by being a fuel rather than just a Web site.”

In a deal announced last year, Rhapsody will allow Verizon Communications Inc.’s 67 million customers who use their phones to listen to music to manage it on their computer and load it onto their phones – something that hasn’t been easy up to this point.

Launched in December 2001, Rhapsody has built a music subscription service, as well as a free Internet radio service.

Rhapsody offers several services, which the company says together have just under 3 million subscribers. The most comprehensive service, Rhapsody to Go, costs $14.99 a month and gives customers unlimited access to a library of 5 million songs that they can listen to on portable devices. But the number of subscribers has been flat, said Anu Kirk, Rhapsody’s general manager of product management.

The service has been hampered for a variety of reasons. It doesn’t work with Apple’s iPod, the most popular digital music player. Critics have debated whether enough people are interested in a subscription service and whether Rhapsody’s subscription price is too high.

Now, the Rhapsody subscriber will be able to preview as much music as they want before buying directly from the Rhapsody store. Music shoppers who aren’t subscribers can listen to 25 full songs a month.

“ITunes is like a vending machine,” Kirk said. “I look at Rhapsody as a complete breakfast.”

 

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