The case study on RealNetworks poses an interesting challenge to the traditional idea of buying music by song or album. I believe this case has significant validity, and that RealNetworks has undeniable potential to become a force to contend with in coming years.
My question for either Reid or Glaser would be this: Judging from the data available, when will Rhapsody and RealPlayer become viable, profitable services? Furthermore, how will this happen? Income statements for RealNetworks show steadily decreasing operating losses. My question, then, is when and how will these become positive numbers?
I believe the answer to my question would cover many areas. Let us assume for the sake of simplicity that Glaser is the one to answer. He would probably first remind me that the operating losses have been decreasing, and that this is expected to continue. He would go on to explain that the key to securing more income will be convincing individuals that an unlimited streaming service is much more useful and much cheaper than having to pay for each individual song. Once consumers will be able to stream songs wherever they want and to whatever device they want, such persuasion will be much easier. Also to note is that individual songs and albums are cheaper on Rhapsody - 79 cents and 7.99 respectively, compared to 99 cents and 9.99 on iTunes. With competitive pricing and more access to music, it follows that RealNetworks simply needs to effectively market their products to gain a lot of users. Rhapsody-to-go is another improvement that lets people bring their music with them on compatible MP3 players. If RealNetworks can point out the usefulness of this capability, it could very significantly boost the number of users for Rhapsody.
From my standpoint, I hardly knew anything about music subscription services in the past. I simply used iTunes because I bought an iPod awhile ago. I had a bad experience with a Creative Jukebox Zen, and so I went with Apple. Having read the case study and having researched Rhapsody, I can honestly say I will not buy another iPod when I am in the market for a new media player. Unless Apple makes it affordable for me to legitimately fill up my iPod, a cheaper, comparable player from another company that I can fill up for $15 a month makes infinitely more sense to me than an iPod that would cost thousands to fill, and more if I count my changing music tastes. RealNetworks has an excellent opportunity. As long as they play their cards right, they may be extremely profitable down the road.