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RealNetworks (Nasdaq: RNWK) on Friday released an enhanced version of its Rhapsody digital music subscription service optimized for MP3 music players. The upgrade adds a more customizable user interface and an easier method for transferring music to portable players using a drag-and-drop feature.
Rhapsody 4.0 also relies on Helix, digital rights management technology that RealNetworks built itself. Earlier Rhapsody DRM had been based on Microsoft's (Nasdaq: MSFT) Plays-for-Sure system, which had reportedly included a number of bugs, occasionally causing tracks downloaded to MP3 players or computers not to play.
Challenging the Behemoth
Rhapsody 4.0 also does away with the necessity of using a PC as an intermediary for downloading music tracks to a portable player. Now users can download tracks directly to their portable players, instead of having to download them to PCs first.
RealNetworks has made a series of moves this week to challenge Apple's (Nasdaq: AAPL) dominance in the digital music space. The firm on Thursday announced it was partnering with MP3 player maker SanDisk and electronics retailer Best Buy (NYSE: BBY) to create and promote a subscription and buy-to-own music service.
The Best Buy Digital Music Store will use the Rhapsody service, and will be featured on the SanDisk Sansa e200R line of Rhapsody MP3 players, which the companies said have been "optimized to work seamlessly" with the new store. The new MP3 players and the new service are set to launch on Oct. 15.
The Best Buy service will cost $14.99 a month for unlimited access to the site and $9.99 for limited access. Subscribers can buy songs for 89 cents and nonsubscribers can buy songs for 99 cents.
In conjunction with that announcement, SanDisk announced a slate of new MP3 players based on Rhapsody DNA, a technology platform that combines Real's Helix DRM and synchronizes with other hardware and software platforms in a more integrated way than earlier schemes.
Market Battle
The digital music market is not yet saturated, according to analysts. "It's a young category. There are still opportunities for other companies to come in," said Roger Kay, president of Endpoint Technologies. "You're going to see entrants in this until there is stability," Kay said.
It's going to be difficult, however, for any one company to overcome Apple's lead. That firm controls about 80 percent of the marketplace with its iPod devices and iTunes digital music service. "Apple has got a lot of momentum and not all [of] these [other] services may be successful," Kay added.
Microsoft is set to release its Zune player and subscription service next month. Zune will use Microsoft's home-grown Plays-for-Sure system. Users will pay $15 a month for the music service and 99 cents for each permanent song download.
Whether Apple responds to increasing competition with price cuts or other promotional offers remains to be seen. However, the company has to consider its strategy carefully. "Apple has to begin to be a little bit concerned about the perception of being a monopoly," Kay said.
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