RealNetworks to launch music on demand

RealNetworks plans to rent music on a monthly basis that can be stored on a range of supported digital music players.

Digital media company RealNetworks Inc. plans to unveil on Tuesday a new portable music service for digital music players as part of its subscription service portfolio, a source familiar with the plans said on Monday.

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The Seattle-based company, which operates the Rhapsody subscription music service, will now let listeners rent music on a monthly basis that can be stored on a range of supported digital music players.

RealNetworks declined to comment.

The company plans to debut the service at a splashy New York press conference on Tuesday, followed later in the evening with a performance by Sony BMG artist Good Charlotte.

The company also plans to license digital rights management software from Microsoft Corp., the source said. Microsoft's software, code-named Janus, will disable songs from playing on devices after a customer stops paying.

RealNetworks plans to rent music on a monthly basis that can be stored on a range of supported digital music players.

Only several devices on the market current support the software. They include some models made by Creative Technology Ltd., Samsung Electronics Co. and iriver.

Real's entry into the market, which has been widely speculated in the technology community, puts it in direct competition with Napster Inc.

Napster operates a similar online subscription music service for PCs and MP3 players that lets paying subscribers fill up digital music players with an unlimited amount of music instead of purchasing individual songs.

The music industry, which continues to face declining CD sales, views the digital music market as a key area of growth to court a new generation of listeners.

The subscription market, comprised of Real's Rhapsody, Napster and Yahoo Inc.'s MusicMatch service, is estimated to generate about $200 million in 2005 sales.

By contrast, the digital music downloading business dominated by Apple Computer Inc. is expected to draw in about $350 million in 2005 revenue, according to Phil Leigh, an analyst at market research firm Inside Digital Media.

Music labels, criticized for dragging its heels to court digital music listeners, are now aiming to distribute its artists as widely as possible, industry observers said. Several labels, including the Warner Music Group, eye music over cell-phones as another lucrative distribution outlet.

Real's new service will cost $14.95 per month, which includes a subscription to the Rhapsody service. Rhapsody subscribers currently pay $9.95 a month to listen to over 900,000 songs streamed to desktop computers.