Comcast Corp. unveiled a new partnership with Real Networks Inc. last week, announcing a deal to carry the online company's Rhapsody online music service on its Comcast Online portal available to 5 million subscribers.
"We're real excited about coming to the market with Comcast Rhapsody," said Dave Juliano, senior vice president and general manager of Comcast Online. "Our portal aggregates services in an easy way for customers, and music is one of the critical things they want us to bring to them. This is a critical element in growing the value of our proposition for our subscribers."
Rhapsody includes 400,000 songs and more than 100 commercial-free Internet radio stations. Consumers can burn a song for 79 cents after signing up for the standard $9.95-per-month service, which affords access to the Rhapsody song library for playback purposes.
Real also announced a deal with Intel Corp. on a box that plugs into a TV and, with a wireless fidelity (Wi Fi) connection, allows consumers to play Rhapsody music stored on their PCs on home-theater and stereo systems.
The deal puts Rhapsody on four of the top five MSOs, as it already had deals with Cablevision Systems Corp., Charter Communications Inc. and Time Warner Cable's Road Runner division. Real also said Comcast plans to promote the new feature heavily, including carrying TV spots in its cross-channel inventory, giving Rhapsody's its first national television exposure.
For Comcast, this ups the ante in the competition with digital-subscriber-line service providers.
"We're looking to constantly build value," Juliano said.
High-speed customers value simplicity and ease-of-use features, he said, and Rhapsody falls into those categories.
Juliano reiterated how Comcast is raising download capacity from 1.5 megabits per second to 3 Mbps. The next step is the addition of new features, he said.
Comcast already features the Real Arcade gaming service on its portal.
"We've done our homework," Juliano said. "Rhapsody is an excellent service."
Because Rhapsody carries both new and older artists, the service appealed to Comcast's mainstream demographic base. "We aim for the dead center of the cable demographic," Juliano said.
Legitimate online music is making a huge leap in popularity, Real Networks CEO Rob Glaser said. "We've seen very dramatic growth in the digital music space," attributable to the lawsuits filed by the Recording Industry Association of America, as well as the legitimate iTunes music service launched by Apple Computer Corp.
Glaser said Rhapsody subscribers listened to 12 million songs in July, but that figure has jumped to 16 million in August, 21 million in September and 28 million in October. The average Rhapsody user listens to 200 songs a month, with more than 100 of them unique, Real said.
Rhapsody counts 250,000 subscribers, representing almost 25% of Real's 1.1 million subscriber count.
Glaser said the à la carte songs and commercial-free Internet radio stations fulfill two different consumer needs.
To market the service, Rhapsody is launching a nationwide advertising campaign as well as a free trial offer. To encourage sampling, new subscribers will be offered a seven-day free trial, without the need for a credit card.
Comcast has made the same offer to its high-speed subscribers, plus new Rhapsody subscribers can download their first 10 files for free. The TV ads also will run in Comcast cross-channel slots.
Intel is supplying some of the internal hardware for the TV plug-in devices that allow consumers to access audio files on their PCs, and play them through their home stereos, via a Wi Fi connection.
Omnifi is one of the first companies shipping these "Rhapsody-ready devices," Glaser said. It's priced at $299.
In a related move, Comcast announced a retail partnership with 400 Staples stores nationwide to sell high-speed Internet service.
The opening offer includes a $150 mail-in rebate for customers who buy Comcast's broadband Internet service at Comcast-area Staples stores or via the company's Web site (www.staples.com) between now and Dec. 31.
Both the Web site and in-store displays will provide marketing information about Comcast's high-speed service. New subscribers can purchase a self-installation kit or get Comcast technicians to install the service.
"Comcast's broadband-Internet sales strategy is about aligning to customers' buying preferences," Bob Faught, senior vice president of retail and commercial online sales, said in a statement.