“RealNetworks is now involved in a war of words with rival digital music outlet Apple Computer Inc. Apple CEO Steve Jobs was quoted yesterday as saying RealNetworks’ business model, providing subscription services, is ‘not succeeding,'” ComputerWire reports.
“RealNetworks CEO Rob Glaser said Jobs’ comments were ‘ridiculously humorous’ and pointed to RealNetworks’ 55% growth in music revenue as evidence that the model works, according to the Reuters news service,” ComputerWire reports.
“Glaser recently proposed a strategic alliance with Apple in an email to Jobs, threatening an alternate alliance with Microsoft, which caused embarrassment when Apple publicly declined the offer by leaking the email to the New York Times,” ComputerWire reports.
Meanwhile, “RealNetworks Inc yesterday announced the resignation of its president and COO… Lawrence Jacobson, who worked at RealNetworks for three years, resigned, effective immediately ‘to pursue other opportunities and spend more time with his family,’ the company said in a statement,” ComputerWire reports. Full article here.
“RealNetworks said its music revenue increased by 55% while the company posted overall revenue of $60.4m in announcing its first quarter results,” Gareth Vorster reports for NetImperative. “The digital media service company said that it added 100,000 new music subscribers in the first quarter, now topping 450,000. Music revenue grew to $12.3m, from $7.9m in the fourth quarter of 2003, with its RealPlayer Music Store now offering more than 500,000 tracks,” Gareth Vorster reports for NetImperative. Full article here.
MacDailyNews Take: Real has a real winner here: 200,000 less tracks than Apple’s iTunes in a format that won’t play on the market-dominating players, Apple’s iPod and iPod mini. Now that’s really ridiculously humorous.
If their revenue is 12.3 million a quarter, that translates to less than 1 million a week. Apple is supposedly at 2.7 million a week now right?
MacDailyNews Take: Real has a real winner here: 200,000 less tracks than Apple’s iTunes in a format that won’t play on the market-dominating players, Apple’s iPod and iPod mini. Now that’s really ridiculously humorous. —
Plus, their business is all subscription based. Now, that’s ridiculous and hilarious at the same time. These guys are “tubing” big time. Nice try, Glaser!
It doesn’t say that their revenue is from the music service only. They also have real player.
lenny,
that revenue includes subscription fees and license fees to buy the pro software. iTunes’ 2.7 mil is all paid downloads…. so REALs number point to much below 1 mil, I would guess something like 200,000 per week, if that.
I think me means ridicoulously true.
Even if the 12.3 million was all downloads, that’s just a lot of music that people don’t own. They quit paying or Real goes out of business, and <poof> the music is gone. I’m so jealous </sarcasm>
“RealNetworks said its music revenue increased by 55% while the company posted overall revenue of $60.4m in announcing its first quarter results,”
What is the point of having 60.4m rev if you still manage to lose 10.6m overall? I REALly like Real. If it wasn’t for them, we’d have one less sorry ass iTunes competitor to kick around.
I did some calculations based on some assumptions of Real’s revenue. I assumed revenue from purchasing real player was not part of the 12.3mil from music. I also assumed 75% of their 450K subscriptions opted for the more expensive service while the remaining 25% selected the cheaper service. Based on the above assumptions (which could be totally wrong), I come up with the following:
– Rhapsody subscription service ($10/mo) represented just over $10mil in revenue.
– Radio Pass subscription service($5/mo) represented just over 1.6mil in revenue.
– Downloads represented the remaining revenue, a measly $555K or just 702K downloads for the quarter (54K per week).
If we change the subscription assumptions to 50/50 between the two choices the revenues are much different:
– Rhapsody, $6.7mil
– RadioPass, $3.35mil
– Downloads, 2.25mil or 218K tracks per week.
At most 83% of the subscriptions can be the more expensive service given the amount of revenue they report.
Clearly they are bringing in a respectable level of revenue but the question remains if they can do it profitably.
Well… I’m starting to lean towards wishing that Real makes a reasonable business — just enough profit to keep them running but not able to do anything else. Why?
For a start, Gates needs a bug to swat to relieve his intellectual (cough) energy — better Real than Apple.
Second, the schadenfreude of knowing that their thousands of subscribers are worrying if they will ever be able to unsubscribe, or of knowing that those poor buggers are actually using the services of one of the creepiest companies around.
I don’t want to be denied a feeling of smugness once in a while. All I’ll have to do is to think about Real’s customers and I’ll get a strong hit that’ll satisfy my craving for months. After all, wouldn’t it be a weird world if everyone was smart or rational? I’m talking about humanity after all. “Long live diversity!” Every dog needs a bone — let’s throw Glaser one.
The only thing far more “ridiculously humorous” is Real’s repot of wider net loss year-over-year!!!!!! Glaser is a crown, will M$ please abuse Real some more !!
Glasser can understand FUD but he can dish it out. He can’t do well with the truth either. Oh well I am sure the subscription will serve a small portion of the music market. Gee MS, Napster, Virgin and Real can all fight for that 20%, no wait, 10%, no just dropped 5%.
Apple is more successful, but that doesn’t mean Real isn’t successful. Any of you hypocrites want to talk about Mac vs. Windows in the broader market?
This is just one more example of the weak gaining a little power, and proceeding to abuse the people in their former position.
<sarcasm>Right. The business model is working. Congrats to Real for not making profit. </sarcasm>
I would just point out that no matter how much people want subscrition services to fail, there are always people willing to do such things. I’d never do that, but I know people that do and they love the idea. So it can be panned all one wants, but obviously there is a demand for such a thing.
You guys kick a$$
Real has treated Apple users like second class citizens for years now. At NAB I just laughed at the Real Booth (so small you could have missed it) and Glaser was holed up in a tiny office in a tiny booth at this Hugely Important show. It said a lot.
Microsoft is cool because of the xbox. thats it u guys are way cooler.
The company thinks leaving is good. they are only selfish and want more money because. Switching companys will not help there buisness. Microsoft could just buy the company.If thats what they want then Whatever
U goes should send me 100$Or more.
Ok, Dennis, name all of the hardware companies that made a profit last year. We are, for the most part, talking about profit here. Apart from Apple and Dell, can you name any? I’m not real knowledgeable, but there’s only one or two more at the most. Combine the download market and the computer manufacturing market and Apple is looking pretty good.
Oh, wait, you’re talking about market share (but you’re afraid to mention it directly). Yes, Apple has a relatively small market share. Shame on Apple for producing computers that can be used effectively for more than three years. The installed user base (how many computers are actually sitting on people’s desks) is a better measure of use. Are you going to include all of the popular cash register models in this number? Most anal-ysts do, but its difficult to understand how or why a cash register is considered a personal computer.
Sorry for the copy&paste;…
It would be very interesting to find out what percentages of WinPCs:
a) aren’t used for office work – where WinOffice is the only software installed
b) aren’t used a cash registers, info kiosks, etc.
c) aren’t used as a $1700 video game machine
It would also be very interesting to find out what Windows people think can’t be done on a Mac.
It would also be very interesting to find out why Windows people think the Mac should just go away.
If apple does go out of business, will the price of Windows become cheaper for them? Will it become easier for them to ‘choose’ a ‘brand’ of computer if there’s one less to choose from?
These are not, empty rhetorical questions. I’d really like to know.
Actually, I really need to know.
– – –
And like before, I’m sure will go unanswered!
MacBuddy, I would guess that there is a way to find out some of the answers you “need” but I have no idea what that would be. I find it hard to imagine the price of pc’s being affected if Macs disappeared, I don’t know that they view Apple as their primary competitor. Personally I think they view Apple as their primary R&D department. I think you’d be more likely to see pc’s slowly die out as they become unable to develop and push new technologies on their systems (e.g. Apple didn’t develop USB, but it didn’t take off until Apple put it on the iMac). Since brands will stagnate, the deciding factor on picking a pc will be price and price alone. As far as the first few questions, IT research sites would be the place to start IMO. Since I’m probably one of the least qualified to speak to the subject, though, other thoughts would be welcome.
I don’t understand why Apple doesn’t offer a subscription service in addition to song purchases. If nearly half a million customers will pay Real for a subscription, why shouldn’t Apple want that business as well?
for XABEX:
simple – iPods! The worst thing about having a portable player is if the music stops working when you stop paying. So, subscriptions tend to be limited to those only interested in listening to music in one place – the desktop computer with ready internet connection. The iTMS is designed to sell iPods, NOT music. Encouraging the subscription service even slightly would take business away from the iPod. Once you go iPod, however, the solution is complete. That is Apple’s logic, and justification.
Remember CD or book clubs? Those don’t work anymore even though people got actual CDs and books. The Real model is the same except without the material gratification of forever owning the objects. As well, how different is the Real model compared to listening to the radio – especially if you can only listen to music at fixed locations or under specific conditions? (You can’t take Real to go on vacation or share with friends, necessarily, especially if they don’t have internet access or even a computer!) Of course, choice is an issue, but to actually pay for it, and only for that one aspect? Even XM radio has been smart enough to offer portable solutions. I think XM radio is the only viable subscription model for longer terms. As well, recall that the iPod does more than play music. It stores notes, calendars, contacts, audiobooks, and all your files that you desire. Sure, other players might play music, but they don’t offer these bonuses, and they don’t have access to iTMS. The Jobsonian approach is the only way to insure the supremacy of iPod and iTMS. Arguments about market share, Apple’s history, etc. all miss the point because none of you perceive the not so subtle differences between music players and computers + software, or even the actual subtleties of the music industry.
Ultimately, everyone here is ignoring one thing: the online music distribution model is not sufficiently profitable, if at all, in terms of required hardware, licensing, etc. Real’s model can’t work for long because you don’t make enough from just selling music. Apple’s model is sustainable because the hardware yields profits. I don’t think it’s a matter of people having trouble with Glaser, or Real claiming some sort of profit, or that there is sufficient space in the market for competitors. Rather, they are really arguing for the distinction between the hardware and software models.
So, the question now is: why do people here repeat the same arguments over and over against Apple? It’s a general business model irrespective of the players involved. Apple just got it right this time. Anyone else could have, but they didn’t! What’s the big deal with all you detractors? And don’t get me started about The Inquirer’s accusations against the BBC – what a joke that was. (Oh no, to actually praise something that merits it? You’re so biased!) Would you have the same stubborness if the name was Microsoft, or even Real? Would something the size of Microsoft have been able to augment iTMS and iTunes so quickly as Apple has?
RealNetworks has some kind of music service? Who knew?
Meanwhile, “RealNetworks Inc yesterday announced the resignation of its president and COO… Lawrence Jacobson, who worked at RealNetworks for three years, resigned, effective immediately ‘to pursue other opportunities and spend more time with his family,’ the company said in a statement,” ComputerWire reports.
Ah yes, the old “spend more time with his family” excuse. More like rats fleeing a sinking ship.