SXSW 2008: Rhapsody understands how the music industry has changed, looking to make most of new environment

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It’s amazing. Ever since the music industry declared war on its customers a few years ago those of us who spend entirely too much time online have debated back and forth on message boards, modern day salons. How dumb is an industry that sues its own customers? (Answer: Very.) What compels people to pirate music in the first place? (Answer: Immediacy. Ease of use. “Good enough” (or better, especially on What.cd and the like) quality.) Does the industry recognize that its role will never be what it was in preceding decades? (Answer: No.)

You know who does “get” all of this, though? Rhapsody, the online music service. Probably not who you were thinking. Well, the headline gives it away, but you know what I mean to say.

In speaking to a director of product management earlier today, I came away with the impression that Rhapsody, out of all the non-iTunes music services, knows exactly what its role in the music business should be, and needs to be.

It helps that the Rhapsody guy I spoke with, one Anu Kirk, is a musician. Not an old, disaffected suit with an eye toward a stock price, but a legitimate fan of, and creator of, music. He’s been with the company since its beginning and continues to believe in its rightness.

But Rhapsody has a little bit of an image problem, something Kirk readily admits. For whatever reason, the service is seen as something tied to Windows. That’s not particularly useful, especially when the anti-Windows, Apple, is so closely associated to (digital) music nowadays. iPod. iTunes. Rip. Mix. Burn. Best not to tie yourself to Redmond in this space.

So what’s Rhapsody’s philosophy? One, that it’s a music service that needs to, and will, diversify itself. The subscription music business couldn’t be any smaller. (Kirk likens the online music business to a pyramid. At the bottom, and most widely used, is piracy. BitTorrent, you name it. Next comes free services like Imeem, followed by pay-to-download services à la iTunes and, lastly, subscription services. Rhapsody.) Rhapsody would rather be known as your one-stop music source. For $15 per month you can access its entire library from any number of devices, be it your desktop in the attic, your laptop at work or a portable player with built-in Wi-Fi. You know, what we all thought the Zune was going to do way back when. Or, if you so desire, you can download a song at $1 a pop and keep it forever (preferably sans DRM… you did pay for it, after all). Give people a choice, Kirk says. Makes sense to this writer.

One issue was brought up that I’ve seen debated ad infinitum, the issue of, “Who wants to subscribe to music then, when you stop paying, it all goes away?” Kirk reckons that people watch TV without recording everything they watch, returning to it at some vague point in the future. (Well, some people do. They’re called packrats.) Same thing with a subscription service. Everything’s listenable at some point, then you stop listening. If you want to hear a song again and again forever then you’d buy it for $1.

Rhapsody has a few ideas for the future to improve its standing in the online music business. New players, new features, new music, etc. The goods, in other words.

It’s not all, “Golly gee, Rhapsody is cool!” Of course not. It still has to convince people that paying for music on a monthly basis not only is OK, but that it’s smart for you, the music fan spending the money. (And how do you compete with free, as in BitTorrent and other forms of piracy? V0, FLAC, high-res JPEG artwork, all handled by people love music. They just happen to hate the industry.) Its Web site could use a new coat of paint. Its library could be a little speedier to get the newest music. (It only just recently added Radiohead’s In Rainbows to its catalogue. That could be a Radiohead problem, but the name of the game is convicing the labels to “get” it. Blood from a stone.

Rather than just say, “Rhapsody? Yeah, never mind,” I’d say to keep an eye on those guys. The right attitude is certainly in place, that much I can say with full confidence. Now it’s just a matter of hitting the final note on time.

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