Rhapsody Suddenly Has 1.7 Million Paying Subscribers…

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The landscape of streaming services is saturated, and the number of services continues to grow. The Associated Press is now reporting some surprising subscriber numbers for Rhapsody, who doesn’t exactly come to mind as one of the leaders in their field.

Rhapsody says they now have 1.7 million paying subscribers, up 63 percent from last year.

In comparison, Spotify announced they had 6 million paying subscribers in early 2013. They haven’t announced any more milestones since then.

The news sound great for Rhapsody, but apparently most of their growth came from bundled deals with mobile phone carriers. In October 2013 Telefonica moved a bunch of its customers over to Rhapsody and invested in the streaming service.

When Nina Ulloa isn’t writing for DMN she’s usually reviewing music or at a show. Follow her on Twitter.

15 Responses

  1. TuneHunter

    Telefonica has almost quarter billion users in S. America.
    If this is “key alliance” we have another proof that streaming is just DEAD END proposition.

    • Dr. X

      Streaming is a DEAD END in Japan. It’s almost none existent there.

      But guess what? Their music market (with physical making up 87%) dropped a whopping 15% in 2013.

      Physical 2013: $2.6 billion USD (down from $3.05 billion)
      Digital 2013: $403.4 million USD (down from $531.3 million)

      Anti-piracy laws in Japan is the harshest in the world.

    • Rhapsody

      Even if you consider streaming to be a “DEAD END” proposition, your opinion does not matter one bit. It’s the opinion of the music labels that matter most. And for these record labels, they see streaming as a VERY POSITIVE force.

      From Billboard:

      “Rhapsody’s news comes as first quarter SoundScan data show downloadsales dropping by some 13% in the first quarter even as streaming music rose by 35%. Springer, and other executives say that the attitude of labels toward streaming music services has shifted significantly to be more positive. “All of our conversations with the labels are about streaming taking over,” said Springer.”

      It would be great for the music industry if the internet doesn’t happen and CD still dominate. But the internet did happen.

      • TuneHunter

        My opinion will matter sooner than you think. Music industry is in the state of INFERNO!

        There is not enough cash in all inclusive streaming which is killing Radio and music as a merchandise.

        Industry is operated and all decisions are made by 10 confused golf lovers!

        Just few pissed off mega stars can and will change the environment.

        Rhapsody/Napster will quadruple and will have a chance for billion dollar IPO if we switch to discovery moment monetization.

        • TuneHunter

          By the way you can omit communist propaganda from Dr. Ek’s puppet below!

  2. Dr. X

    Why internet radio increasing market share will be MUSIC to the labels’ ears:

    Internet radio (USA): $590 mil royalties payment in 2013 (up 28% from 2012)
    Terrestrial radio (USA): $0 in royalties payment in 2013

    Pandora reports that it has 9% market share in overall radio in March 2014. Imagine the revenue to the music labels if Pandora has 18% market share, 27% market share, 36% market share

    9% market share in radio = $590 million royalties
    18% = $1180 million royalties
    27% = $1770 mililion royalties
    36% market share in radio = $2360 million royalties


    $0 in royalties from terrestrial radio

  3. Dr. X

    Streaming is poised to be the BIGGEST of these components in just 8 months time in the USA:

    Streaming: #1
    Physical CD: #2
    Singles Download: #3
    Album Download: #4

    Here’s what it looked like in 2013 according to RIAA:

    CD (physical): $2.1235 (down 14.6%)
    Singles Download Revenue: $1.569 billion USD (down 3.4%)
    Streaming Revenue: $1.439 billion USD (up 39.3%)
    Album Download Revenue: $1.234 billion USD (up 2.4%)

  4. Dr. X

    It is very possible that STREAMING will surpass DIGITAL DOWNLOAD in the USA by the end of 2015.


    Singles Download Revenue: $1.569 billion USD (down 3.4%)
    Album Download Revenue: $1.234 billion USD (up 2.4%)

    = $2.803 billion USD combined


    Streaming Revenue: $1.439 billion USD (up 39.3%)

    Download will continue to drop year by year. Streaming will continue to increase year by year. At the near future, the two lines will cross. It could be at early as 20 months from now (end of 2015).

  5. Paul Resnikoff

    Mobile-bundled deals pay far less to the streaming service than direct-to-consumer relationships. And, far less to the rights owner because a large percentage is shaved off by the carrier because they created the deal opportunity and relationship in the first place.

    Then, of course, Rhapsody is not controlling these subscriber relationships, they are merely bundled into another subscriber relationship. And that goes for the billing process too: the transaction is handled by the carrier, which then doles out the shares based on what it gets. Rhapsody cannot charge without going through this highly-controlled and protected channel.

    All in all, it’s inferior for everyone except the mobile carrier (and, consumer enjoying the bundling benefits).

    But, that’s the way Rhapsody is growing now. Not through direct-to-consumer relationships that yield the highest payout, but through compromised packages.

    Will Rhapsody survive when Google, Apple, and Amazon are all streaming, and trying to shrink Spotify the gorilla into a chimpanzee? I wonder.

    • Nina Ulloa

      & The consumer only enjoys it if they happen to care about the bundled benefits.

    • Casey

      I wouldn’t say Rhapsody isn’t still working on selling subscriptions directly to consumers. They recently cut their $15 per month plan, allowing for 3 mobile devices on the $10 plan. And they are overhauling their software player, which is used primarily by direct subscribers. They wouldn’t have bothered with either if they only cared about acquiring customers through bundling. But fighting for customers is an uphill battle when you have to compete with free services. Bundling may very well be the only way they can win. Whether or not it affects royalties will have to be seen. Their MetroPCS deal didn’t seem to have much of an impact.

      • Paul Resnikoff

        Right, I didn’t say they were abandoning direct sales. But, the latest jump in subs was from from bundled.