Because there are simply too many streaming services, not enough streaming subscribers, and way too many licensing costs involved.
Which means that from here on out, the number of streaming music services will probably start to shrink.
Which brings us to Rhapsody: effective immediately, Rhapsody president Jon Irwin has been sent packing, along with 15 percent of the entire staff. The move immediately follows an investment by Columbus Nova Technology Partners, which is slotting principals Jason Epstein and Andrew Intrater as board members to steer things differently.
Updated, 6:15 am Tues.: Rhapsody CFO Adi Dehejia has also been cut, according to details confirmed by the company this morning, with ex-Starbucks executive Ethan Rudin replacing him. We also have more information on the incoming executive team, which will include Brian Ringer, chief technology officer, Paul Springer, senior vice president, Americas, Thorsten Schliesche, senior vice president, Europe and Rudin as CFO.
Of course, Columbus is pointing to expansive growth prospects in Europe, and great overseas opportunities ahead. Which is one way to explain away a heavily American layoff, but ultimately sounds like bulls%*t. Just recently, financial statements obtained by Digital Music News showed roughly $9.2 million in losses for the first half of 2013 alone, a gaping 64% drop from 2012.
Here’s where this gets scary: Spotify’s losses are legendary, but Rhapsody almost exclusively caters to paying subscribers only. Which means that one million paying subscribers still translates into roughly $20 million in annual losses for Rhapsody.
And this is a good business because…?
More as it develops. Written while listening to Above and Beyond.