Rundown On Real [6:36 pm]
Real’s fight with Microsoft is profiled, although the real question the article addresses is whether their bet on the subscription model will win out over the iTunes/song-based model of music e-tailing: Musical Chairs With the Big Boys
With its 350,000 subscribers, RealNetworks is the largest of the digital music subscription services, a nascent market that allows users to listen to music without storing it on their computers. It includes MusicNet, Musicmatch, Roxio’s Napster and others. At the end of last year, the music services had more than 700,000 paying subscribers, triple the number of a year earlier, industry analysts estimate.
No one knows how the emerging digital music business will evolve. Some insist that the pay-per-song formula will prevail because it is more like the way people have traditionally bought music. Others say Rhapsody is the future of music, allowing unlimited sampling and experimentation. The subscription model, they say, will transform the experience of listening to music in the same way that TiVo digital video recorders have allowed users to personalize television viewing in all sorts of new ways, by pausing, rewinding and replaying TV programs.
On the subject of digital music, analysts are often sharply divided, as are the industry’s leading executives. “Customers do not like the subscription model - it’s a failure,” said Mr. Jobs, Apple’s chief executive. “They pay $120 a year and they don’t like the idea that if they stop paying monthly fees, their music goes away.”
For his part, Mr. Glaser points to the $7.9 million in revenue that RealNetworks’ subscription music services collected in the fourth quarter of 2003, a 70 percent increase from the third quarter. “If you call 70 percent sequential growth a failure, I’m happy to be a failure,” he said. “Steve’s model works for him, and ours works for us. We don’t compete head-on.”