Rhapsody to Spin Off as Separate Company

By Geoff Duncan February 10, 2010

Image used with permission by copyright holder

Real Networks and media giant Viacom have announced plans to spin music subscription service Rhapsody as an independent company. To make the move Viacom will restructure its minority stake in the company and turn over necessary intellectual property rights, while RealNetworks will surrender its majority stake and contribute about $18 million in operating capital to get Rhapsody up on its feet as an independent player. Once the deal is done, Rhapsody will have no single majority owner.

“Separating Rhapsody into its own independent company is a significant first step in making RealNetworks a more focused and profitable company,” said RealNetworks president and newly-minted acting CEO Robert Kimball, in a statement. “Rhapsody will be the largest pure play digital music service in the market.”

The news comes a month after long-time RealNetworks CEO and founder Rob Glaser stepped down from the CEO chair last month.

Rhapsody is a monthly all-you-can-eat music subscription service; it was one of the first to market, but like almost every player in the digital music market that isn’t iTunes, has struggled to find a customer base and audience. At the end of the third quarter of 2009, Rhapsody had about 700,000 subscriptions, down from about 800,000 at the beginning of the year.

Former Digital Trends Contributor

Geoff Duncan writes, programs, edits, plays music, and delights in making software misbehave. He's probably the only member…

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