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New Rhapsody Slashes Burns

The competition for online music customers is heating up.

RealNetworks launched RealOne Rhapsody on Friday and simultaneously dropped the price of burning from 99 cents to 79 cents per track.

Subscribers to the existing RealOne SuperPass entertainment service already have been receiving Rhapsody’s Internet radio product. These 900,000 customers will gradually be migrated over to the complete replacement service, which includes the customizable professionally programmed and custom radio stations along with on-demand streaming, extensive music information and editorial comment, features and recommendations.

Real Networks vp marketing Dan Sheeran said new customers will see only RealOne Rhapsody to minimize confusion.

RealOne Rhapsody has more than 330,000 tracks available for on-demand listening, of which more than 200,000 have burning rights.

“We believe this is a great offer to consumers who are just now realizing the power of online music services,” said Merrill Brown, senior vp RealOne Services at RealNetworks.

Sheeran said that RealNetworks was going to market the music service “far more aggressively” than any of its previous subscription products, including advertising on its partners’ sites as well as on such music destination sites as Billboard.com and RollingStone.com. He said that public interest in legal online music was heightened by Apple’s iTunes Music Store launch and that RealNetworks wanted to use this opportunity to reach people looking for a service that would work on Windows and that had a richer offering.

The reduced price point for burning was instigated by Listen.com, Rhapsody’s creator, and will apply throughout the company’s distribution network. Listen.com CEO Sean Ryan said that its half-price trial in February tripled the number of tracks its subscribers burned and “significantly” increased the number of subscribers.

Selling burning rights is not a strong revenue source, however. “There’s not a lot of margin in it by itself, but it’s going to drive uptake, and that balances out the loss of revenue,” Listen.com vp product management Dave Williams said.

He declined comment on whether the service planned to offer individual downloads without a subscription, as is the business model for Apple’s iTunes Music Store.

RealNetworks simultaneously remains an active partner in MusicNet, America Online’s official music subscription service, along with AOL Time Warner, Bertelsmann and EMI. It recently participated in a new $10 million round of funding.

RealNetworks entered into a definitive agreement to acquire Listen.com last month for $36 million in cash and stock. Rhapsody remains available through its other distribution partners, which include 15 major broadband and DSL providers along with online music sites, computer manufacturers and consumer electronics companies.

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