RealNetworks' Profits Up, Revenues Increase on Music

Release: RealNetworks reported increased revenues for Q2, of $82.7 million, up 26 percent from $65.5 million in year-ago quarter. It had a net income of $4.7 million, compared to a net loss of $4.6 million in the year-ago quarter.
Q2 results include a gain of $7.6 million associated with the sale of MusicNet, and a $6.5 million of incremental marketing expenses associated with the launch of a new version of its Rhapsody online music service.
The company has a total of 2 million content subscribers, and 1.15 million on which are music related (music subscribers up from more than 550,000 for the year-ago quarter).
-- Music revenue grew 61 percent to $24.1 million, up from $15.0 million in the year-ago quarter.
-- Games revenue grew 63 percent to $13.6 million, up from $8.4 million in the year-ago quarter.
-- Media properties revenue, which includes advertising, increased 22 percent to $8.2 million, up from $6.7 million durinthe year-ago quarter and compared to $5.6 million in Q1 2005.
-- Real's business products and services generated $12.1 million in revenues, compared to $11.7 million in the prior year's second quarter.
For Q3, its revenues are expected to go down to be between $80 million and $82 million, slightly below Q2, based in part on the discontinuation of several low margin standalone video products and a $1.5 million revenue decrease related to an expiring legacy systems license agreement.

RealNetworks Burns Quick Rhapsody Ad

AdWeek: A smart move by RealNeworks: RealNetworks will respond to MGM v. Grokster case with opportunistic full-page ads tomorrow, reminding users of its legal Rhapsody service, the company said.
The ads will run in The Los Angeles Times, The New York Times and USA Today...The headline reads: "The decision is in. The best choice for free, legal digital music is Rhapsody."
It adds: "It's the only place where you can get free and legal access to over 1,000,000 songs, and share music with your friends." The tagline is "No hassles, no lawsuits."

Rhapsody's Catalog Shyness

Derek Slater: What's with these changing rights on rentals on Rhapsody music service? "I had been listening to the album for a few weeks, when, today, I noticed that I can no longer play 'URAQT' off the Universal release, and that the single version is only available for sale and not for streaming. Same goes for 'Bucky Done Gone', though I can play it off the Beggar's Banquet release. What gives?"

palmOne Puts Rhapsody On LifeDrive

MarketWatch: Real Networks has announced that it's Rhapsody service has been bundled into the new LifeDrive from palmOne. The LifeDrive is like an iPod for business people -- it has "a 4-gigabyte hard-drive based device (3.85GB user available) that fuses business productivity tools and entertainment applications, allowing users access to their essential documents; personalized content, such as photos, home movies or their MP3 collection; email; and wireless web access". It has Bluetooth and WiFi but no mobile network access...People who buy the LifeDrive get a 30-day free trial of Rhapsody Unlimited, which will allow them to stream or download an unlimited amount of music to their PC (and hence, if they wish, to their LifeDrive) from a library of 1 million songs and 1500 music videos. After that the service costs $9.99 per month.
Related stories:
--RealNetworks Mulling Wireless Music Services

RealNetworks Aims To Avoid Price War With Yahoo

Yahoo:  Today, RealNetwork's shares were down nearly 5 percent at $5.29 on the Nasdaq, after dropping about 20 percent yesterday, thanks in part to Yahoo's recent announcement that it will be offering a low-priced music subscription service...According to Real's Chief Financial Officer Roy Goodman,""I didn't particularly see anything in Yahoo's announcement that was innovative, fresh...I heard people say it was cheap...Our view is that its going to be unprofitable for them and therefore unsustainable."

RealNetworks Stock Rises On Music Outlook

AP: RealNetworks had a good day today, a day after its Q1 earings showed a small first-quarter profit and its raised forecasst for the year. Its stock rose about 10 percent on Nasdaq...
As we reported yesterday, revenue from music rose 86 percent to $22.2 million during the first quarter, outpacing game sales, which grew 80 percent to $12.2 million.
"The key for RealNetworks over the next few quarters will be to demonstrate strong revenue growth with its newly released Rhapsody product," Piper Jaffray analyst Aaron M. Kessler said in a report to clients. "It will be critical for Rhapsody to cement its market share as the competition is increasing in the subscription business, with aggressive marketing from Napster and with Yahoo likely to enter the market over the next couple of months."

Rhapsody To Go Way Too Buggy; To Role Out New Update

PCWorld: Or so says PC World's tester, after testing out the new portable subscription service from RealNetworks, Rhapsody To Go..."[D]espite trying with two IRiver H10 MP3 players, two Rhapsody accounts, and two PCs, and getting suggestions from Real engineers, I was never able to transfer any Rhapsody track I hadn't bought outright onto a portable player. For me, at any rate, Rhapsody To Go just didn't work."
And a lot of people are complaining on the company's forums as well..
And due to this, Real has just announced plans to roll out updated software in the coming week...

More on New Rhapsody: Exploiting Mojo

eWeek: I'm quoted in this story on the new Rhapsody version: "Napster tried to create some buzz with the Superbowl ads but it didn't seem to work. I think RealNetworks has to build on the mojo of Rhapsody and look at new, creative ways to market the service," he said.
"That business model is defined by whatever they [Napster and RealNetworks] can wrangle from the music labels. Their hands are tied because of that," Ali said. Another downside of the portable subscription business is the lack of support for mainstream handheld devices.
"Rhapsody to Go will only work if users invest in the hardware. They're launching with two recommended devices but I don't think you'll get people rushing out to buy those just to get the music service. The push has to come on the device side. If it doesn't get ported to enough cool devices, they'll always be chasing Apple," he added.

More Details On The New Rhapsody

Press Release: RealNetworks hopes to be a key driver in the evolution of the online music world with its announcement today of new 3 tiers of the Rhapsody music service, which include compelling features enabling consumers to customize their online music experience. Real celebrated the launch with a public concert at Radio City Music Hall featuring multi-platinum recording artists Good Charlotte. "With the new Rhapsody, millions of people can now experience and share digital music -- legally, and with no strings attached," said Rob Glaser, chairman and CEO of RealNetworks. Click HERE to watch Rob's press conference from this afternoon (about 47 minutes.)   

The new "Rhapsody 25" service delivers free and legal access to listen to (not download) full length songs from all major labels from a library of more than a million tracks for anyone in the U.S.. To use the free service, consumers simply download the Rhapsody jukebox software, which will then allow them to listen to 25 tracks each month from Rhapsody's library and enjoy unlimited access to the jukebox's other features at no additional cost...

Real also announced significant enhancements to its critically-acclaimed "Rhapsody Unlimited" service which costs less than $10 a month and allows subscribers to listen to an unlimited amount of music for less than the cost of a typical CD. Downloaded songs are only $.89 cents and most albums are $8.99. "In addition to streaming an unlimited amount of music, Rhapsody Unlimited subscribers can now download an unlimited number of songs to their PC's hard drive from Rhapsody's library of more than one million songs, and enjoy them offline for as long as they remain subscribers."

In addition, Real added a brand new premium tier called "Rhapsody To Go", designed to provide customers the ultimate experience in portable digital music. Similar to Napster To Go - it will give subscribers the convenience of enjoying their favorite music wherever they go by allowing the transfer of an unlimited number of downloads to compatible portable music players (currently Real is recommending iriver H10 and the Creative Zen Micro, but more models are promised soon.) 

Apparently, Real's business relationship with Google and new sponsorship relationship with Chrysler will help offset the music licensing costs they will incur, which have been set at a rate "that is generally comparable to full on-demand subscription service plays."

Related:

--RealNetworks Unveils 'Rhapsody to Go' Music Service

--RealNetworks Launches New Rhapsody services, Gives Away 25 Songs Per Month

RealNetworks Launches New Portable Subscription Service

As expected, RNWK is launching a new version of its popular Rhapsody music service and a new "Rhapsody To Go" portable subscription service...(The video of the press conference announcing the new version is here...)
Some initial details here...
Update: The service now has three tiers:
-- The free ad-supported version: you can download Rhapsody and play 25 songs for free, along with 25 ad-free radio stations. Also, much/CD management etc...the usual stuff...
-- The Rhapsody Unlimited version: much like it subscription service before...$9.99 with unlimited access to 1 million-plus songs, ad-free radio, playlist sharing, etc.
-- The new Rhapsody To Go service, which is the portable music service working with MSFT's Janus DRM system... priced at $14.99 a month. Right now, only two series of devices are supporting this service: Iriver H10 and the Creative Zen Micro portable music players. As a special promotion, consumers who sign up for one year of the Rhapsody To Go service will receive a $100 mail-in rebate on an iriver H10 portable player.

I've been active user of Rhapsody for almost two years now, and have just downloaded the new version and playing with it for an hour. It is pretty slick..the engine running it is definitely much faster, and some features here and there are nice. I like the personalization features as well...
But nothing "groundbreaking" as they purported it to be...and nothing along the lines Fred Wilson wanted it to be...