Thursday, March 29, 2007

Rhapsody Raises (?!) Prices

You guys know I am a big fan of many of the new free on-demand streaming offerings that are popping up out there (Streampad being my current fave). Most of these do the hard work of scouring the web for the content, aggregating it, and presenting it to you for easy consumption.

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...

1 comment:

Anonymous said...

A Rhapsody price increase would indeed suck. Not a smart move considering all of the other free alternatives out there - Streampad, Hype Machine, etc.