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Music streaming company Rhapsody hits 2 million subscribers

Rhapsody hits 2 million subscribers as mobile carrier deals spur growth
Rhapsody hits 2 million subscribers, compared with Spotify's 10 million paying customers

Rhapsody International, a streaming music company that competes with Spotify, has reached 2 million paying subscribers, it said late Monday.

The milestone for the Seattle company that owns Rhapsody and Napster comes as the firm looks to countries other than the United States for growth. The digital music stalwart last reported subscriber numbers in April, when it said it had 1.7 million after long declining to reveal specific numbers.

"The growth is really being driven by two things, and that's mobile and international," said Paul Springer, Rhapsody International's chief product officer.

Though the company, founded in 2001, was one of the first to embrace the idea of getting people to pay a monthly fee for on-demand access to music, Rhapsody is well behind Stockholm-based Spotify, which counts 10 million subscribers among its 40 million active users.

Rhapsody's on-demand streaming service costs U.S. users $10 a month.

The company, in an effort to compete directly with Oakland's Pandora Media Inc., announced in June that it had teamed with T-Mobile to launch a $5-a-month ad-free Internet radio service that allows users to save songs and listen to them while offline. As part of the deal, some T-Mobile customers get access to Rhapsody's unRadio without paying.

Springer did not break out how many people have been using the radio-like version.

The company is trying to gain more users overseas by partnering with mobile carriers. Napster, which Rhapsody bought in 2011, serves as its international brand.

Rhapsody said on Monday that its will make the radio offering available to customers in France through its partnership with French carrier SFR. Through its deal with Telefonica's Movistar, the company is launching its Napster subscription service in Latin American countries including Argentina, Chile and Uruguay.

Smart phone companies hope to use music services as a way to entice more users, Springer said.

"Smart phone penetration is lower in Latin America," Springer said. "What we hear from our mobile partners is, they need services to try to spur that adoption, and music is one of them."

The expansion through mobile carrier deals is a welcome sign for a company that went through a major transition last year. In September 2013, the firm laid off about 15% of its workforce alongside the exit of  chief executive Jon Irwin.

The increase in subscriptions may help the company pare its losses.

Though Rhapsody is closely held, it is 45% owned by the publicly traded technology company RealNetworks Inc. RealNetworks reports Rhapsody's earnings in its quarterly filings. In its most recent quarter, Rhapsody posted a loss of $1.63 million, narrower than its loss of $4.82 million during the same period last year. Its quarterly revenue increased about 24% to $42 million.

RealNetworks will report second-quarter results on July 30.

Follow Ryan Faughnder on Twitter for more entertainment business coverage: @rfaughnder

Copyright © 2014, Los Angeles Times
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