Rhapsody Makes Slow, Steady Climb to 2.5 Million Subscribers

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Rhapsody announced Wednesday it surpassed 2.5 million global subscribers, marking a 60-percent year-over-year increase and a 25-percent gain since the company announced it reached the 2 million-subscriber milestone in June.

Partnerships explain much of the gains. Ethan Rudin, CFO at Rhapsody International, tells Billboard the company has been "generous with the brand and the tiers of service," allowing a variety of Rhapsody-powered products in different markets. In the United States, Rhapsody offers unRadio through fourth-place mobile carrier T-Mobile. Rudin says unRadio subscriptions rose 67% during holiday season "and that pace continued into the first quarter."

The company's partnership with Telefonica has allowed for product launches in Germany, through O2 and Eplus, and through Latin America. In Brazil, Napster -- the company's brand outside the United States -- powers the Vivo Música streaming service that reportedly signed up 150,000 subscribers in its first five months. "Our goal is just to distribute music to more people and have them pay for it," says Rudin.

Other services have already reached 2.5 million subscribers. Spotify has over 15 million. Deezer has 6 million. Although it trails some competitors, Rhapsody isn't experiencing the kind of outsized losses for which the subscription service business model is known. According to RealNetworks' latest financial statements -- the company owns 45 percent of Rhapsody -- Rhapsody's net loss improved to $9.9 million, from $13.9 million in 2013, and was just $131,000 in the fourth quarter.

Rudin understands how a subscription service can lose money right now. He says Rhapsody tries to run "as tight an operation as possible," but calls 2014 and 2015 "investment years." "This is definitely not a period to pump the brakes. There's still a massive portion of the music-listening public that is uneducated about the power of the full music service."


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