On the back of this trend, Real goes and does exactly the opposite of what most would expect, they are *raising* prices for their Rhapsody streaming service.
mediaor: "For the first time in six years, Real is raising the price of a Rhapsody Unlimited subscription (without portable playback privileges) from $10/month to $13/month, although users who spring for a year-long commitment to the service can lock down the current price, according to an email sent to subscribers last night."
I don't doubt that this will generate more short-term revenue. Most of their current subscribers will stick around, and now Real will get a couple more bucks a month for each. But, I'm not sure maximizing revenue out of a relatively small audience is the best way to go. Maybe this is part of a larger strategy (I'm sure it is). As an upsell "ad free" tier from a free, ad-supported, service could make sense. Maybe they will normalize to a single paid tier and give everyone portable support - generate some sales for a particular device.
Now that I think about it (gotta love stream of consciousness blogging), this could be something they are being forced to do by the labels. The new class of wi-fi connected devices (from Nokia, Sandisk and others) put the traditional pricing tiers into a sort of no-man's land. The labels want more money for portability (hence all the "to go" tiers are an extra $5/month), but we now live in a world where you don't need "sync" licenses for your content. You can stream it directly to your Wi-Fi connected device. This enables the same use case that the labels want a premium for. This was of course a short-sighted distinction of tiers by the record companies. When does a PC become a "mobile" device? What is a UMPC? How about the OQO? What about a phone that runs a heavy OS (e.g. Windows Mobile)? Those lines continue to blur, and now we've reached a point where you can no longer tell them apart.
As I'm writing this, I'm guessing that a formal announcement and launch of the Sansa Connect (powered by Zing). That would be pretty sweet actually, I'd buy that...