A new initiative from streaming music service Rhapsody will let its subscribers share songs from its 34-million track catalog with their Twitter followers — who will be able to play the tracks in full without leaving Twitter, even if they don’t pay for a Rhapsody subscription.
Rhapsody says it’s the first streaming music service to offer full-track playback on Twitter, using the social network’s Audio Cards feature. The music is fully licensed by Rhapsody, with a cut going to artists, labels and publishers — a hot-button issue given the emergence of freemium streaming services, such as Spotify.
Rhapsody says one reason for the approach is “to reinforce that music isn’t free.”
The feature will be available in the U.S. only. Rhapsody is testing the feature to see if it can recoup the licensing fees, over time, by converting the Twitter exposure into new subscribers for its $9.99/month music service.
“It’s going to be a huge experiment in how we make music social again,” said Ethan Rudin, the Rhapsody chief financial officer, in an interview.
For Twitter users, it’s the latest expansion of the social network’s capabilities. The integrated Audio Cards feature launched last year with Soundcloud as Twitter’s flagship partner, with a focus on podcasts and limited music sharing by artists. Rhapsody and Twitter are launching the new initiative at South by Southwest in Austin, Texas, appealing to crowds of tech-savvy music fans.
Rhapsody will be collecting data as it goes, and sharing the results with its industry partners in an effort to find an approach that works.
“As of right now, we’re extraordinarily confident in the success we’re going to have in converting people to loyal Rhapsody subscribers, but it’s going to be an experiment,” Rudin said. “If there is the opportunity to fine-tune and make sure this is economically viable in perpetuity, we want to have the proof points to get it right.”
Rhapsody, a privately held company based in downtown Seattle, surpassed 2.5 million subscribers in 2014, but its net loss grew to $21.3 million even as its revenue climbed 23 percent to $173 million, according to financial details disclosed in regulatory filings by RealNetworks, one of Rhapsody’s shareholders.
The result illustrated the high cost of operating a digital music business, with large marketing expenses required to bring aboard new subscribers, in addition to music licensing fees. Rhapsody has been adding subscribers despite increased competition from Spotify, Apple, Google, Amazon and many others in the broader market for digital music.
Asked about Rhapsody’s timeline for profitability, Rudin said, “2015 is a watershed year, not just for Rhapsody but for streaming music in general. It’s not a period in time in which we’re taking our foot off the gas. It’s an investment year. We’re thinking a lot about new product, we’re thinking a lot about promotional opportunities, and music sharing like this Twitter opportunity.”
However, he added, “We’re far more strategic, far more methodical and far more disciplined with our capital,” than many competitors. Rhapsody, founded in 2001, was spun off as an independent company by RealNetworks and Viacom in 2010.