Rhapsody’s IPod Killer

While big online music services like Pandora, Spotify and others (Last.fm, Guvera, MOG…) are getting a lot of attention these days, Rhapsody is often overlooked. Rhapsody has been around longer than the others – they launched in 2001 as the first music service to offer streaming on-demand access to a large library of digital music. Prior to 2001 they were a service called Listen.com.

In 2007 Rhapsody America became a joint venture between RealNetworks and Viacom. In February 2010, Rhapsody’s owners announced their intention to restructure the company into a fully independent corporation, a move that took place last week with Viacom and RealNetworks, as well as Universal Music Group, maintaining positions in the new company.

Over the years, Rhapsody has tried lots of things, from offering songs that had to be played in their player to DRM free all-you-can-eat offerings. They’ve partnered with Verizon, Yahoo, and iLike/Facebook. The service has over 9 million songs in its library, and for a monthly fee of ten bucks they’re available for unlimited on-demand streaming. Yet, according to the LA Times, its paying subscriber base dwindled from 800,000 in early 2009 to 675,000 by the end of the year.

This week, on the heels of their reorg, Rhapsody launched a new iPhone app that should spur a bunch of new subscriptions. In addition to unlimited on-demand streaming for ten bucks, subscribers can download their favorite Rhapsody playlists to their iPhone, iPod touch or iPad so they can listen anytime — even when they’re not connected to the Internet. From their blog: “Simply launch your Rhapsody app, open the playlist and click the Download icon. You’ll need either a 3G or WiFi connection to do this initially, but once the songs are saved to your device, you can rappel into the deepest crevices of the Grand Canyon and still be able to play them back.” For ten bucks you get to do this on one device, for $14.99 you can download your playlists to up to 3 devices.

Access to 9 million tunes, streaming on demand plus untethered downloads of my favorite songs onto a mobile device. It’s the kind of thing that could make listeners trade in their ipods. (And there’s talk that Apple bought Lala to launch something similar). It really puts Rhapsody in a whole new category, but will the listeners follow? Only their history makes me wonder..

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