Friday, July 13, 2007

RealNetworks Outlines Music Survival Strategy

Don McLean may have to record an updated version of "American Pie" as July 15 will forever be known as the day that online music died. RealNetworks has come up with a plan to make the best of the vastly increased royalty payments that web broadcasters will have to pay to music publishers.

RealNetworks has signed a deal with iriver digital music device maker Reigncom for a try before you buy service. Consumers will have a access to a customized set of music to listen to as a means of providing exposure to new music. The company also signed up with LyricSearch to provide access to lyrics on its Rhapsody site as a means of generating more traffic.

Most directly, the Rhapsody monthly subscription service is going up from $9.99 to $12.99. I'm not so sure that this will be enough to enable RealNetworks to profitably deliver online listening services.

The music publishers seem to be short-sighted in drastically increasing the rates for all web broadcasters. Just like reading and watching video, the music experience is going online, and this move will reduce the exposure of listeners to new music. Also, it isn't fair to have separate pricing for online versus terrestrial radio stations. Giving away music to "old media" while bleeding online stations is an inequitable strategy that will hurt music sales.

Posted By John Gartner at 09:43 AM
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