Since being bought by private equity firm Columbus Nova, the Seattle-based Rhapsody International has gone through a rapid period of expansion and reinvention as the No. 2 streaming service looks to differentiate itself from market leader Spotify and rekindle its U.S. growth momentum.
This week it unveils plans to launch an unlimited radio service. The catch? You pay $4.99 a month for it.
The Rhapsody unRadio service will tie in with fellow Seattle company T-Mobile’s unCarrier marketing strategy, allowing subscribers to listen to curated and self-created radio stations without ads, skip as many songs as they like and as save their favorite songs for downloads.
While Rhapsody has put this together in a smart package, it’s not necessarily different from what’s available if you’re a paying subscriber to the likes of Spotify. Of course, you have to pay $9.99 a month for Spotify’s full on-demand service to get access to the radio.
What’s most interesting about the Rhapsody initiative, which has other features like an ID tag system similar to Shazam, is that it becomes another major player at the $4.99 price-point. The other key player is Pandora, which has 3 million paying subscribers with its ad-free service. New subscribers to Pandora One pay $4.99. But unRadio, which was created from direct licensing agreements with labels, offers additional features on top of what Pandora One currently offers.
No doubt the hope for Rhapsody is that unRadio brings in new music fans that have found the $9.99 tag too pricey. More likely though, the hope, as Rhapsody SVP Paul Springer, says they’ll be able to recruit “hundreds of thousands” of subscribers through the partnership with T-Mobile.
T-Mobile is including unRadio for free on its highest service tier and at a discounted price of $4 to other subscribers.
Springer says the labels have been extremely supportive of bringing new formats to the market. “Labels are eager to watch us try and innovate and grow in this space. It’s important for the market to have choices for customers,” says Springer.
While there has been endless coverage of on-demand streaming music services like Spotify, Beats Music and Rhapsody – which most closely replicate the retail experience, Internet ‘radio’ music services have been far and away more popular with users.
Market leader Pandora has more than 77 million active users a month and 1.73 billion listener hours each month. According to Arbitron’s Infinite Dial 2014 report, in Q1, more than 31 percent of listeners over-12 years old listened to Pandora, with Clear Channel’s iHeartRadio with 9 percent and iTunes Radio next with 8 percent. Spotify came in fourth with 6 percent.
