Exploding popularity of streaming music vindicates Seattle’s Rhapsody

When T-Mobile announced a new streaming radio service this week with Rhapsody, it was just the latest in a series of moves helping the pioneering Seattle-based music service continue to survive and even thrive against its deep pocketed and higher-profile competitors.

Rhapsody launched in 2011 as the first on-demand music service to offer unlimited access to a huge library of music for a flat fee. It was 16 months before Apple opened the iTunes Music Store, but in the era of CD’s, many consumers couldn’t get their arms – or ears – around the notion of not physically owning all of their music.

The company came close to going under several times over the years, but some shrewd partnerships and a risky decision to break away from parent company Real Networks proved to be the right moves, as Rhapsody slowly built its subscriber base. Its backers remained steadfast in their belief consumers would one day embrace the notion of paying a small fee each month for access to millions of tracks. And all these years later, they have.

A major sea change for the industry came in 2008, when Swedish startup Spotify came on the scene. Like Rhapsody, it offered streaming music and downloads through subscriptions. But it also offered free access, and by the time it launched in the U.S. in 2011, Spotify had become a media and consumer darling. With partners ranging from Facebook to Rolling Stone, the company became the leading player in the streaming industry.

If there were any doubts about the future of the streaming music business, one look at the recent deal by Apple to purchase Dr. Dre’s company Beats for $3 billion is proof positive consumers and the industry have fully embraced it.

“Subscriptions are here to stay,” says Paul Springer, Senior Vice President and Chief Product Officer at Rhapsody, in an interview with Seattle Sounds. “You only have to look at the number of entrants into the space. Some of the largest companies in the world have really decided that subscriptions are the future.”

Rhapsody’s latest offering is a new radio service called unRadio. It’s similar to the popular Pandora service, but offers subscribers far greater control of their music. Much like Pandora’s subscription service, it allows unlimited skips and ad-free listening, along with the ability to save your favorite songs and listen to them at any time – even without a connection.

UnRadio costs $4.99 a month and is available for iOS, Android and Web use. T-Mobile will offer it at no additional charge to customers on the Simple choice plan, and a discounted price of $4 per month for any other T-Mobile customer.

Rhapsody has yet to make a profit and still lags far behind rival Spotify – which recently announced it had reached 10 million paid subscribers. But Springer says the company feels vindicated by its recent growth.

“We announced that we were growing 63% year-over- year last year. We expanded from three countries to 33 countries, and we’re now north of 1.7 million paying subscribers in that full on-demand business.”

Listen to Paul Springer/Rhapsody, discuss the company and growth of streaming music on Seattle Sounds: