Rhapsody Adopts Music App Strategy

Rhapsody

(from Billboard Magazine, November 17, 2012) With new music services such as Spotify and iHeart Radio, Rhapsody has seen its better days in popularity. Rhapsody is an on-demand streaming service that is in the process of reinventing itself to start making money again. The music service will begin dropping song download sales and advertising to fully focus on getting more customers to buy into their music subscription service. The company, which is based in Seattle, will be releasing more than a dozen stand-alone apps for mobile devices. Each of these apps will offer music-related features like song identification, concert locations, and social sharing. The plan for the company is to get people to download the apps, and then sign up for the premium all-you-can-listen service from the advertising of the company.

The company launched in 1999 as listen.com and it is currently the longest running digital music service. The problem for that Rhapsody has is new players in the field such as Spotify. In a little more than a year, Spotify already gained over 1 million paying subscribers, and in 2011 Rhapsody had a little over 1 million users. The services that Spotify offer are part of the reason it has gained more customers than Rhapsody. These services offered, that Rhapsody needs, are a “freemium” model which allows access to a large library of on-demand music, without ads for a monthly fee.

Paul J. Springer, Vice President of Rhapsody, is leading the new strategy that they are about to begin. He previously worked on the Amazon Kindle and digital products, so he hopes to bring his knowledge to the table in the new strategy. Springer says, “We’re a music company. Our customers are listeners.” They plan to give the customers what they really want instead of more ads like other music services. Since the president of Rhapsody, Jon Irwin, has not released any data, it is unclear if the company is giving up significant revenue to invest in the new strategy. Its customers are paying between $9.99 and $14.99 per month for a catalog of 16 million tracks. The next step for the company is now getting people to try the service. By giving out apps in the next few months, they are sure people won’t hesitate to sign up for their new service.