Rhapsody, the largest U.S. music-streaming service, is considering acquisitions and partnerships.
Rhapsody — the largest U.S. music-streaming service, which announced Thursday that it has surpassed the 1 million subscriber mark — is considering acquisitions and partnerships as the company looks overseas to double its subscribers.
The Seattle-based company, which bought Napster’s U.S. business from Best Buy in November, may announce deals early next year for Napster’s U.K. and German operations, Rhapsody President Jon Irwin said. That would turn up the heat on London-based Spotify, a rival service founded by Daniel Ek that has 2.5 million paying users worldwide. Spotify launched in the U.S. in July.
“We’re looking to grow internationally,” Irwin said. “We’re looking for scale, and there’s not many large players out there. I suppose I could make Daniel Ek an offer.”
Rhapsody is talking with wireless providers in the U.S. and internationally about agreements like the one it has with MetroPCS Communications, which bundles music with prepaid text and data plans, Irwin said. Closely held Rhapsody, spun off from RealNetworks in 2010, is profitable, Irwin said, while declining to provide figures.
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Irwin isn’t convinced that offering free or advertising-supported services, as Rdio and Spotify do to draw in paying subscribers, is an efficient way to sign up customers. While those services are free to listeners, the companies still pay for each song.
“We’re not burdened with paying a huge sum for free music in order to create a funnel to convert listeners into paying users,” Irwin said. “That’s a subscriber acquisition cost, and it’s a very expensive one.”
Rhapsody subscribers pay $5 a month for unlimited access on computers or $10 a month for access on PCs and mobile phones. The company provides a 14-day free trial. Most choose the $10 plan, Irwin said.
For the first time, Rhapsody streamed more music this year to people listening on equipment other than a PC, with about 40 percent going to mobile devices, the company said in an emailed statement.
Rhapsody also is working with automakers to make its service available in vehicles, a path Internet-radio provider Pandora Media and Spotify already are taking.
“Like Steve Jobs said, we are in the post-PC era,” Irwin said. “It’s about mobility and having your device with you. The devices out now are fully capable of allowing you to take your music with you wherever you go.”
When Rhapsody split from RealNetworks in April 2010, the service had 650,000 subscribers, Irwin said. It had 800,000 users when Rhapsody acquired Napster last month from Richfield, Minn.-based Best Buy, which retains a minority stake in the service.
Now, at Rhapsody’s 10-year anniversary this month, Irwin says the company has grown “quite well beyond” 1 million subscribers.
“We’ve been advocates of the streaming business well ahead of its time,” Irwin said. “What’s changed is that music fans now understand they can have the ease of these models with them wherever they go.”