Case | HBS Case Collection | March 2004 (Revised September 2005)

RealNetworks Rhapsody

by Thomas R. Eisenmann and Steven Carpenter

Abstract

Examines RealNetwork's (Real's) strategy for the rapidly emerging online music market. In contrast to rivals who sell individual copies of songs, Real offers online music on a subscription basis. For a $10 monthly fee, subscribers to Real's Rhapsody service have unlimited rights to stream all songs from a 600,000-title library to any PC and can burn CD copies of these songs for 79 cents apiece. Real faces significant marketing challenges in persuading consumers to "rent" rather than own their music. The company must decide which channel partners--broadband access providers, consumer electronics retailers, PC manufacturers, or portals--are best equipped to help sell its services. Finally, Real must determine how to differentiate its services from those soon to be offered by a glut of new competitors poised to enter the online music market, including Wal-Mart, Viacom, Sony, Dell, and Microsoft.

Keywords: Online Technology; Competitive Advantage; Distribution Channels; Music Entertainment; Ownership; Service Industry; Retail Industry; Music Industry;

Citation:

Eisenmann, Thomas R., and Steven Carpenter. "RealNetworks Rhapsody." Harvard Business School Case 804-142, March 2004. (Revised September 2005.)