Is the Subscription Game Over? Rhapsody Subscribers Keep Eroding

Will paid subscriptions ever work?

During the recent third quarter, Rhapsody subscribers continued to wane, according to disclosures Thursday by joint venture partner RealNetworks.  The breakout revealed a total of 700,000 subs, down from 750,000 at the midpoint of this year.  At the beginning of 2009, the tally was 775,000.

The descent is happening against a surge of free, on-demand options, and continued, volume-heavy trading on platforms like BitTorrent and private hosting sites.

So what next?  Rhapsody is pushing into the iPhone and iPod touch, though its core focus will remain PC-centric experiences (at least for now).  “While our primary means of creating revenue for RealNetworks will remain focused on PC products and services aimed at consumers and mobile products and services for carriers, we believe these core businesses provide an ideal foundation to extend and drive growth through platforms like Facebook and iPhone,” the company stated.

Meanwhile, RealNetworks has been aggressively cost-cutting to preserve the bottom line.  During the quarter, revenue dropped 8 percent to $140.3 million, though net income landed in the black at $1.52 million.  That beats a net loss of $4.5 million recorded last year.  The company carried cash and short term investments of $373.2 million as of the quarter end-date of September 30th.