Less than two months after RealNetworks (NSDQ: RNWK) and MTV Networks (NYSE: VIA) announced plans to spin off the veteran subscription music, Rhapsody is now on its own. It’s a little like a kid graduating from college with uncertain prospects: the college grad still has the same parents but their responsibilities have shifted and he/she might have to take a lower-priced gig to make a splash. The new Rhapsody International Inc. gets a small cash cushion of $18 million from Real and $33 million in advertising from MTVN in exchange for 47.5 percent of the stock each. The splash? Rhapsody Premier, a $10 live-streaming service from any browser and across devices — PC, TV, iPhone and, as of today, Android. The new unlimited music subscription removes any additional costs for mobile streaming, although it’s limited to one portable device. (It also seems to remove quite a bit for current subscribers, something I’m checking into and will update here.)
The spin became official March 31 and was announced this morning in an SEC filing. RealNetworks and MTVN together own 95 percent; the remaining amount includes the employee pool, a small share for Vivendi’s Universal Music Group, and a private individual. The rest is set aside for other potential investors or strategic deals.
Update: As I mentioned above, the introduction of the new plan leaves a lot of unanswered questions about current subscriptions. Among them: what happens to downloads? A Rhapsody spokesman said Rhapsody will offer a higher-tier Premium Plus for $15, comparable to Rhapsody to Go. The plus plan will allow access on three mobile devices but he has yet to confirm that the plan includes downloads. Meanwhile, as of this morning when their publicity started, the site had nothing about the higher tier or any kind of description of multiple plans and what happens to current subscribers. I was told no note has been sent out yet to current subs — and as a longtime subscriber, I have yet to receive anything. When I logged in, Rhapsody offered to let me “buy now” (that led to an offer to buy an iPhone) or to download an app. When I tried to edit my account info, the link went to an offer to sign up for the new service.
Update 2: Rhapsody tells me the $10 plan should include downloads to subscription-enabled MP3 players — something that’s not clear on the site — and that the plus plan covers up to three download-enabled devices or a mix of streaming/download devices. This all comes against a backdrop of more competition and Rhapsody’s own leakage of subs. It was down to 675,000 paying subscribers at the end of 2009.