Rhapsody Cuts Workers as New Investor Arrives

September 17th, 2013

Rhapsody, a electronic tunes provider that pioneered the subscription model now dominated by Spotify, has laid off its president, Jon Irwin, together with fifteen p.c of its workers, as the provider struggles to continue being competitive in a crowded market.

Rhapsody International, the service’s father or mother company, declared the adjustments on Monday in link with the arrival of a new trader, Columbus Nova Technological innovation Partners, which has turn into a considerable shareholder in Rhapsody in exchange for an undisclosed investment. Two of the firm’s principals, Jason Epstein and Andrew Intrater, have joined Rhapsody’s board.

The information of the layoffs was initial noted by The Verge, a technologies information World wide web site.

Launched in 2001, Rhapsody was 1 of the 1st providers to sell month-to-month subscriptions for obtain to massive libraries of music for streaming on-line. But with the arrival and rapid development of Spotify — which has a paid out tier as well as a free of charge version supported by promoting — Rhapsody has fallen guiding. The firm claims it has much more than one particular million subscribers, despite the fact that it has not introduced distinct figures considering that it acquired Napster, a competing services, in late 2011.

The layoffs will have an effect on only employees in the United States, and about 200 staff will continue being with the company around the world, a spokeswoman mentioned. Mr. Irwin will carry on as an adviser. In its announcement, Rhapsody said it wished to “accelerate its endeavours in Europe and rising markets.”

“Rhapsody Worldwide is poised for great progress,” Mr. Epstein said in a assertion. “We’ve not too long ago launched the Napster songs streaming services in 15 further countries in Europe, rolled out a partnership with MTV in conjunction with German wireless provider ePlus and have a sturdy pipeline of item innovations and global partnerships in spot.”

Rhapsody is privately owned, but some of its finances are disclosed by way of the general public reporting of Real Networks, which owns forty five p.c of the services. In its most latest accounting, Genuine Networks said that Rhapsody experienced a overall of $ sixty eight.six million in income for the 1st 50 % of 2013, down 6 percent from the same period the calendar year prior to its internet decline also grew to $ nine.two million, from $ 5.6 million in 2012.

By distinction, Spotify has 24 million lively end users around the globe, 6 million of whom pay, and it described about $ 578 million in revenue final calendar year. But internet losses are frequent at even the most successful electronic songs providers. Spotify, which suggests it is targeted on progress fairly than profitability, dropped $ seventy eight million previous yr.

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