All the Music You Can Eat, on Your iPhone? Wall Street Snoozes.
by Peter Kafka
Posted on September 11, 2009 at 7:45 AM PT
The announcement from RealNetworks that Apple had approved its iPhone app–all you can eat music, to go, for $15 a month–gave the company’s stock a brief jolt.
But that was Thursday, and that’s old news. After a run-up of more than 10 percent, Real’s stock is back in the $3.30 range, where it stood before the iPhone announcement.
The problem: While a lot of digital music nerds I’ve talked to in the last day or so are excited about the app, the first of its kind to hit the market in the U.S., Wall Street seems to think consumers won’t care. They’re just not going to pay a monthly fee to listen to music.
Here’s JP Morgan’s Vasily Karaysov: “Rhapsody’s subscriber base (750K as of Q2 ’09, a decline of 50K sequentially) reflects the existing demand for a subscription-based music service irrespective of the device on which it’s available. We don’t expect the new application to reverse the challenging trend.”
To be fair, Real Networks (RNWK) is a thinly traded stock with other challenges, and it can move for all sorts of reasons. For instance, there has been a bit of buzz about the damages that Real will have to pay Verisign (VRSN), which could be significant.
But I do get the sense that even in the Apple-crazed tech press, which goes bananas for every Apple (AAPL) morsel it can find (true or not), Real’s app seems to have floated under the radar. But Real’s rival, Spotify, whose app does more or less the same thing at the same price but is only available in Europe (for now), says that demand has been overwhelming, so much so that Spotify has had to restrict its offering to new subscribers, at least temporarily. So what gives?
[Image credit: Kaibara87]
Comments
$15 per month is $180 annually. I have enough songs on my iPhone to play continuously for 8.5 days without a repeat. My sister in law lives with us and has a similar amount of music on her iPod Touch. With home sharing I can now copy over any of her songs. She’s got a big collection of Jazz, Broadway show music, and Blues. I like those categories and they’er different from my own library. After integrating I should be able to go for 12 or 13 days without a repeat.
So explain to me why it is that I’d want to pay Real $180 per year.
Posted by Dave Small at September 11th, 2009 at 8:19 amHm, there is one HUGE difference between the Rhapsody and the Spotify apps: the Spotify app will save titles/playlists for offline use, with the Rhapsody app you can only enjoy what you have paid for while you have access to a data network. So, if you want to listen to music while riding on a plane or in most underground or cross-country trains… you might have nothing most of the time. The demand for subscription-based music is small anyhow, but without offline capabilities, you must really be dumb to pay a penny for it.
Posted by Uwe Rueckeshaeuser at September 11th, 2009 at 8:24 amThere is also the question of quality — Real uses 64Kbps data rate for their stream vs. 256Kbps for iTunes Store downloads and even higher bit rates including Lossless (full CD quality) encoding for CDs imported in iTunes. Real’s quality is laughably bad.
I think part of the reason that Aplle (and AT&T) are happily agreeing to competing music streaming is that nobody will use it.
Posted by Ted Todorov at September 12th, 2009 at 6:16 amHere’s why you’d pay for the subscription….new music! I’ve used Rhapsody thru my Sonos for years and when U2 releases a new album, I have it the same day. You can also browse all new music every week to see what you like or don’t like. There’s also the fact that you can browse all genres of music to see what else you might like. The way I look at is that the subscription is the equivalent of buying 12 new CD’s a year, big deal. But, hey, if someone else is buying new music and giving it to you for free or you’re just happy with your stagnant collection of Abba albums from 1985, then you don’t need Rhapsody on the iPhone!
Posted by Jimmy Dee at September 12th, 2009 at 10:38 am