News

Rhapsody Traffic Up, but Lawsuit Looms

7/02/2003 5:28 AM Eastern

Dropping the price to burn a song to CD apparently had consumers marching to
the tune at online music distributor Rhapsody.

The online music-download service run by RealNetworks Inc.’s newly acquired
Listen.com (www.listen.com) subsidiary
reported that it has streamed more than 11 million songs to subscribers since
June, at a rate of more than 350,000 titles daily.

In May, the service entered something of an Internet pricing war in response
to Apple Computer Inc.’s debut of its own music service, iTunes Music Store (www.apple.com/music/store). To trump
iTune’s 99-cent price to burn a song, Rhapsody dropped its price to 79
cents.

That apparently opened the floodgates. During the past month, Rhapsody has
logged almost a 100% increase in CD-burning activity among its subscribers and a
45% increase in on-demand streaming.

RNI acquired Listen.com in April for $36 million.

But the news isn’t all sunny for RNI and Listen.com. On Friday, San
Francisco-based technology-licensing company Friskit Inc. filed suit in federal
court in Chicago, claiming that RNI’s 'RealOne Player Plus' and Listen.com’s
Rhapsody service have infringed on three of its patent for streaming online
media.

Friskit is seeking a permanent injunction barring RNI and Listen.com from
using the streaming technology. The technology involves features that allow
customers to create personalized playlists and order how they listen to
songs.

RNI and Listen.com are denying the infringement claim.

"We've spent years and millions of dollars developing and patenting the most
convenient ways for consumers to find, personalize and play streaming media over
networks," Friskit’s chairman and CEO George Aposporos said in a release. "Most
other patents cover pieces of solutions, not what's fundamental to the beginning
of a new industry."

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