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Strategy report
TO: Proximity music team FROM: Joel Detwiler DATE: October 3, 2009 SUBJECT: Rhapsody strategy analysis

Here is my Rhapsody strategy analysis. Rhapsody has recently pushed beyond its web services and is in a position to provide streaming digital music to the iPhone and other smart-devices. It is not yet known how effective this move is or what impact it will have on Gen-Y.


 * Profile**

Rhapsody is an online service, established in 2001, which offers streaming digital music as well as digital music downloads to its users. Rhapsody is owned by RealNetworks, which also runs many other internet and software media services. RealNetworks was founded in 1995 by Rob Glaser (Wikipedia, 2009).

Rhapsody’s services include a free, limited version, as well as various levels of paid subscription for premium access. Rhapsody is also available through TiVo and Nokia Internet Tablets. Recently it has extended its services to iPhone users and has plans for development on other smart-phone devices. Rhapsody has a catalog of 5 million songs for both streaming listening or for purchase (Wikipedia, 2009).

Rhapsody had a reported 1.4 million users in 2006 (Wikipedia, 2009). RealNetworks shares have been on a “roller coaster,” however they are recently up to 3.80. Music sales for the company have gone up by 9% the last quarter, while expenses have gone up by 21% (Hesseldahl, 2009).


 * Competitive Landscape**

The main force driving competition in the streaming music market is the move from personal computers to smartphone devices. Rhapsody’s streaming music is now offered as an application on the iPhone, and potentially other portal devices, allowing users to subscribe to monthly access to large music databases and purchase digital copies of their favorite songs and albums. This integration of two previously distinct domains gives Rhapsody an advantage in a young market.

Competition comes from Pandora, which offers its free streaming music service as an app on the iPhone as well. Another competitor Rhapsody may face is a service called Spotify, which has not yet been released in the US (Van Buskirk, 2009).


 * Rhapsody’s Strategy**

Rhapsody’s goal is to provide smartphone users with access to their music services by releasing applications for iPhone and Android-driven mobile devices. They are the first big player in this specific market, and their recent release seems to be faring well as it’s brought in 200,000 downloads via the app-store on Apple iPhones (Cook, 2009).

Although a direct competitor has not yet entered the US market, a similar service has already been approved for release on the iPhone through Apple’s app-store. Spotify, the main competitor, has a more robust set of features slated for its initial release compared to what Rhapsody offers users. These extra functions, including “Offline playback” of music, may or may not play a significant role in the success of the competitors in this market (Cook, 2009).


 * Gen-Y Implications**

Rhapsody for the iPhone is a promising strategy for RealNetworks, given that the market is still young, and the Gen-Y users are nearly all equipped with some form of mobile device that can run applications and stream content from the mobile networks. How Gen-Y will respond to Rhapsody in the face of other competitors will be determined in part by the inclusion of features useful to mobile users.


 * References**

Cook, John. (2009, Oct 1). Rhapsody app off to a 'good start' with 200,000 iPhone downloads. Tech Flash. Retrieved from http://www.techflash.com

Hesseldahl, Arik. (2009, Sept 28). RealNetworks: Time to Sell Rhapsody?. Business Week. Retrieved from http://www.businessweek.com

Van Buskirk, Eliot. (2009, Sept 10). Rhapsody iPhone App Underwhelms, for Now. Wired: Epicenter. Retrieved from http://www.wired.com/

Wikipedia, Rhapsody (online music service). In Wikipedia online encyclopedia. Retrieved from http://en.wikipedia.org/wiki/Rhapsody_(online_music_service)

Blog proposal
TO: Proximity music team FROM: Joel Detwiler DATE: October 27, 2009 SUBJECT: Blog post proposal

I propose that we do our Proximity blog post on the competition between subscription streaming music services available for mobile phones. This post will increase exposure to these services, as well as guide users in deciding if such services are a worthwhile investment.


 * Rationale**

Mobile phone users compose a large percentage of the population, and demand to have the convenience of all their needs in one device. Recently released apps for streaming music are gaining popularity within Gen Y, and also facing competition among each other. This competition will determine which features are most useful to users, and influence the direction that this market takes as it develops.


 * Sources**

The following source contains information about the Rhapsody app available for iPhone and other devices. There are several media that would be useful in a blog post. http://realnetworksblog.com/?p=1040

This source provides an outline of the future service, Spotify. http://www.wired.com/epicenter/2009/08/apple-approves-spotify-iphone-app-in-europe/

Report proposal
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Team conference presentation proposal
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Sales letter and report prospectus
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