RealNetworks Dips into Subscriptions

SAN FRANCISCO (08/15/2000) - In a move that underscores its transformation from a software maker into a media company, RealNetworks Inc. has launched a subscription service.

Modeled on cable television, the service requires consumers to adopt tiered payment structures for different levels of access to programming. For US$9.95 a month, consumers who have purchased the company's RealPlayer Plus software will have access to a selection of exclusive content like Sports Illustrated's swimsuit video, on-demand concert Webcasts, celebrity interviews, games and automatic software updates. RealPlayer Plus, which costs $29.99, offers higher-quality video and audio than the free version of RealPlayer.

While the software is popular among MP3 enthusiasts, the new service, called RealPlayer GoldPass, does not include music at the moment. RealNetworks officials say the company is in talks with the major labels about licensing their music libraries, according to published reports.

No more than a handful of content sites have managed to get away with charging monthly or yearly fees. But a number of online entertainment companies - most notably in the music industry - are beginning to reconsider the model. Inc. began offering paid subscriptions to streamed music by genre or artist in May; and in recent weeks SpinRecords and EMusic have both introduced subscriptions for unlimited MP3 downloads into their business models. All three sites charge less than $10 a month, but their selection is mostly limited to little-known bands. Big Five labels Universal and Sony Corp. have announced plans to offer a joint-venture subscription service, though they have yet to reveal any details.

Much of the industry's renewed interest in the subscription model can be attributed to Napster. Not only has the MP3-swapping service's tremendous popularity spooked the record business, but it has pushed online music companies to come up with new models that satisfy consumers and generate revenue at the same time. So far, Napster has only achieved the former.

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