Real to lose Rhapsody

Out, damned Spotify

The new management at Real has lost little time in deciding what to do with Rhapsody, its well-regarded music service. It's getting shot of it.

Real will spin it out to operate as a private company, and reduce its 51 per cent majority shareholding. Viacom owns the other 49 per cent via MTV. More details are expected in an earnings call later today.

Rhapsody pioneered the on-demand model copied by Spotify, but without the ad-supported free access option. If "support" is quite the right word for a business that was snaring only 14p per user per month just six months ago. Rhapsody charges $15 a month for the "to go" option, giving mobile access to an 8 million song catalog. The service has 700,000 subscribers.

Both use DRM: Rhapsody uses Microsoft's, while Spotify uses one of its own fiendish creation. Rhapsody can work on an iPhone/Touch app, but can't (as yet) cache songs. It also offers punters DRM-free downloads.

Real hasn't launched Rhapsody outside the States yet, while Spotify claimed it has 7m paying customers for its own service. Spotify wouldn't say how many were one-off day pass payments.

Spotify has yet to set a date for its US launch. ®