“Seattle-based RealNetworks, which is one of several companies trying to win consumers over to a music-subscription service that competes with Apple Computer’s iTunes store, says it has doubled the number of paying customers in the past year,” Peter Kafka reports for Forbes. “Real said Tuesday that it had 1.4 million subscribers for its music services at the end of 2005, up from 700,000 a year before. The company said it had earned $312 million in 2005 on sales of $325 million. [Note: Real’s year-end results include a $478 million payment from Microsoft as part of an anti-trust case settlement… Real expects to receive another $283 million from Microsoft during the next five quarters.]
“Real makes most of its money selling consumers access to entertainment like music and games via subscription services, in which customers pay a monthly fee to ‘rent’ their entertainment,” Kafka reports. “…To date, Internet music subscription offerings like those from Real, Napster and Yahoo! have yet to take off – there are perhaps 3 million subscribers to Internet music services… Dan Sheerhan, Real’s senior vice president of consumer services, said the main hurdle facing subscription services is that the devices don’t work with Apple’s successful iPod line of music players, and that competitors haven’t come up with a device that works as well with Real’s offering as the iPod does with iTunes. That should change in 2006, he said, as Real works with manufacturers including Samsung, Toshiba and SanDisk to offer a competitive product. ‘We’re simply in a phase of the market’s development that we knew was going to come but we thought would be shorter than it has been,’ he said.”
Full article here.
Small potatoes — or, in this case, doughnuts. The also-rans’ annual mantra: “We haven’t come up with a device that works as well as the iPod does with iTunes. That should change in 2004, 2005, 2006…”
From RealNetworks’ press release: “For the fourth quarter, in the Consumer Products and Services segment, Music revenue was $26.1 million, a 29% increase over the fourth quarter of 2004; Games revenue was $15.7 million, a 52% increase over the fourth quarter of 2004; Video, Consumer Software and Other revenue was $22.6 million, a decrease of 10% over the fourth quarter of 2004; and Media Properties revenue was $9.0 million, a 55% increase over the fourth quarter of 2004. In the Business Products and Services segment, revenue was $10.2 million in the fourth quarter, a decrease of 8% over the same period in 2004… In 2005, revenue grew 22% to $325.1 million compared to $266.7 million in 2004. In the Consumer Products and Services segment, Music revenue was $97.5 million, a 50% increase over 2004; Games revenue was $56.3 million, a 63% increase over 2004; Video, Consumer Software and Other revenue was $95.0 million, a 2% decrease over 2004; and Media Properties revenue was $31.1 million, a 43% increase over 2004. In the Business Products and Services segment, revenue was $45.1 million, a 7% decrease from 2004.”
Real is like digital foot fungus; nobody wants it, it’s quite irritating, and, unfortunately, it just never seems to go away completely.
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Related articles:
RealNetworks shares drop 9-percent on weak forecast – February 15, 2006
Oppenheimer downgrades RealNetworks based on Microsoft’s ‘URGE’ partnership with MTV – December 15, 2005
MTV-Microsoft URGE music service not targeting iPod, iTunes users; Real CEO PlayedForSure? – December 13, 2005
Real’s Glaser: Apple iPod+iTunes ‘will lose out because of the share of market forces against them’ – October 29, 2005
Analyst: Real and Microsoft deal ‘doesn’t change the dynamics for Apple in any way, shape or form’ – October 12, 2005
Microsoft to pay RealNetworks $761 million antitrust lawsuit settlement – October 11, 2005
Piper: Napster, Yahoo, MSN, Real fighting for small slice of Apple iTunes Music Store’s pie – September 16, 2005
Rob Glaser photo caption contest now open – June 30, 2005
Real CEO Glaser calls Apple ‘deceptive’ with iTunes Music Store – March 07, 2005
RealNetworks’ CEO Rob Glaser grabs 3 of top 10 spots on ‘Dumbest Moments in Business 2005’ list – January 31, 2005
The de facto standard for legal digital online music files: Apple’s protected MPEG-4 Audio (.m4p) – December 15, 2004
Bono-Glaser photo caption contest now open – October 25, 2004
Analyst: Rob Glaser’s ill-advised war against Apple ‘is going to bite RealNetworks on the ass’ – August 30, 2004
NY Times: Real CEO Glaser was close to having ‘iPod’ before Apple, but let it ‘slip through his fingers – April 24, 2004
Real’s CEO Glaser: Apple’s iPod/iTunes combo ‘threatens to turn off consumers’ – April 20, 2004
Jobs to Glaser: go pound sand – April 16, 2004
Real CEO Glaser begs Apple to make iPod play nice with other music services – March 24, 2004
Real CEO Glaser: ‘iTunes is only going to be used for playing songs you bought using the iTunes store – January 16, 2004
“Nothin from nothin’ leaves nothin'”
– Billy Preston
Isn’t this kind of growth like being the best downhill skier in Egypt? Who cares? This is like being the biggest pile of poop in a field of poop. Big deal.
Real has a music subscription service? Gee. That’s great.
Enjoy this kind of moment while you still can…….
In humans, the estimated prevalence of mental retardation is 2.5 percent of the general population. Mental retardation classified as “severe” is around 0.47 percent of the total population.
The U.S. population is approximately 300 million people. Therefore, 1.4 million (300,000,000*0.0047) are naturally predisposed to be Real subscribers. I could have predicted Real’s music subscriber results years ago.
Looking forward, I see limited growth potential in the U.S.A for Real. Short of reintroducing widespread use of lead-based paint in nurseries, their best hope for the future is to target the rest of the world’s severely mentally retarded now that the lawsuit settlement well has run dry.
What percentage of that increased “user base” is from university/college students forced to pay usage fees along with their tuitions but never, ever use Real products?
If there are 20,000 students paying for this service but never using it does Real count all 20,000?
Real took M$ money and doubled it’s subscription base.
What did Napster say? They are paying over $100 to get each new client for there service?
<b>Subscription based music is a license to steal</b>
http://marv.kordix.com/archives/000400.html
http://blog.kordix.com/cgi-bin/mt-comments.cgi?entry_id=482
Criminy MDN – do you have to put Glaser’s picture at the top of the story? That one can scare little kids, and you may shortly find yourself the target of a government sting operation for purposely posting obscene pictures on your web site! Eeeeeewwwwwwww!
How many acorns are in Rob Glaser’s mouth?
Luke,
Not acorns. A half dozen Krispy Kremes, three per side. He stores them there for emergencies.
can everybody please remember that competition is healthy, and it keeps us from paying over the odds for our music and keeps apple on there toes, thus keeping i-tunes up to date and as good as it is, you cant praise apple for its music dominance and then heckle microsoft for its own dominance, just a thought.
That’s one UGLY mo-fo!
— ndb
subscriptions…what a joke
this company is a joke
watch loudeye…a lot of interesting action there
wow, Glaser would be the perfect cast for a corrupt east-europe double spy…in the 1960’s that is. BTW, anyone knows where to buy those glasses? I want those things badly!
Only reason their subscriber base doubled is because they spent tons of money promoting their garbage on tv next to those annoying commercials.
If it wasnt for money they got by suing Microsoft, they wouldn’t have a positive revenue.
fact is.. This Guy is a pure retard ( real networks ceo ) and his company wont survive.
DO NOT INVEST IN THIS COMPANY. they will go bankrupt in a few years.
How do i know… simple… when Apple pcs take over.. he’ll have no where to put his software on to as easily as he was able to with windows/microsoft.
This guy called Steve Jobs ” pig headed” and i dont think Apple will ever make any effort to make life easy for him(real networks ceo).
So basicly, he has nowhere to go. He’s SCREWED. and so is his company.
Rob Glazer may find Krispy Kremes hard to get soon:
http://seattletimes.nwsource.com/html/businesstechnology/2002800029_cooper12.html
I wonder how many of those 1.4 million subscribers are college kids forced to use RealNetworks as part of their tuition?
MW is “student”…how appropriate!
this looks good, though. Imagine microsofty without apple. Apple music could be like microsoft one day. <sarcasm>Real might just innovate one day, and apple could stagnate.</sarcasm>
Let’s see … 1.4 million subscribers total … only 10% as many as the number of iPods Apple sold last quarter … 3 million downloads / day (and climbing) from ITMS …
Warming up to subscriptions? … the problem Real has is that all someone has to do is change their mind and leave … there is nothing to keep someone as a Real customer … since they are only renting.
I agree with Andy. Apple would get lazy if it wasn’t for competition. Let’s not be arrogant. When it comes to desktop computers Apple’s market share is equally is small and some of the things we are saying here are probably the same that Dell/MS say when Apple reports increases in sales.
Having said that I don’t believe a subscription model is ever going to work.
I gotta say, at least their mac software has improved enough to be more “mac like”. Simple drag and drop installation, and a clutter free player interface. The player performance could be greatly improved, though…
Is that a hatchery in his cheeks? WTF!
Takes horses for course guys. Some people want to buy music, others want to rent it. You “rent” access to TV services – why not to music. If you’d get your collective heads out of Steve Job’s underwear for a moment you’d realize competition is good. Good on Real Player. Long may it continue and prosper.
Yikes! Some of you people are pretty nasty and you know what they say: pride goeth before the fall.
Watch out!
Paying for music you can’t keep is stupid and just plain unAmerican.
The math works out to $6 a month per subscriber. Clearly, there’s lots of discounts at work here. At least they have almost 3x the subscriber base of Napster.
However, $26M in music sales pales in comparison to Apple’s roughly $270M in music sales, assuming a sale rate of 3M a day, per quarter. And a 29% rev growth rate, while doubling subs isn’t exactly great news. Good luck to em, they’ll need it.