James Delahunty
8 Aug 2009 6:29
RealNetworks is making a small 9 percent cut of its music division staff following a drop in subscribers to its Rhapsody music service. The company reported last week that it had lost 50,000 of its 800,000 subscribers over the past three months, mostly due to a rise in the number of credit card defaults brought on by the economic turmoil that impacted credit services in the United States severely.
Viacom's MTV Networks owns part of the Rhapsody music service, which is a prime example of a successful music subscription service for those who advocate the model in the digital music distribution business. The model has the support of major music companies but is struggling to take a hold on consumers who prefer to own their music - or at least think they own it.
Additionally, a failed partnership with telecom company Comcast lost the company a gigantic 1.1 million radio subscribers. The tally fell from 1.2 million to just 75,000 after Comcast discontinued the service. RealNetworks revenue for the second quarter fell by 11 percent to $135.7 million, according to the company.