Rhapsody International today announced that it would be taking a “significant”, yet undisclosed, investment from Columbus Nova Technology Partners and Rhapsody president Jon Irwin will step down. Moreover, the company will be restructuring, which will “affect 15 percent of the Rhapsody staff” resulting in around 30 lay-offs.
It’s unclear just how large Columbus Nova’s investment is in the company, but Rhapsody has obviously struggled to maintain a competitive edge alongside power-house music startups like Spotify, Pandora, and others.
The goal of this investment/restructuring is to balance out the US operations and put more of a focus on Europe and emerging markets.
The Rhapsody-owned Napster streaming music service will be a large part of this, according to the press release. Just recently Rhapsody launched Napster in 15 European countries and, given the dearth of real streaming solutions outside of core Western countries the move makes perfect sense.
Unlike competitors, however, Rhapsody is a paid-only service, neglecting non-paid users who could still potentially generate ad-based revenue.
According to Digital Music News, and this filing, Rhapsody has been bleeding users and cash for quite some time now. In the first half of 2013 alone, the company reported $9.2 million in net losses. But it goes deeper than that.
RealNetworks, which held a 45 percent stake in the company, has been recognizing accounting losses on Rhapsody for the lifetime of the company.