Last week when word hit that pioneering music service Rhapsody might shake up its leadership, RAIN editor Brad Hill asked (here): “Can a subscription-only service provide compelling value against free-listening platforms? For that matter, can any streaming-music business hold its own against content costs?”
The official word came yesterday (and was covered right away by The Verge’s Greg Sandoval) that Rhapsody will “rebalance and restructure U.S. operations,” has laid off 15% of its staff (30 workers), and will replace top managers like president Jon Irwin (who’ll move into an advisory role) and CFO Adi Dehejia. Rhapsody’s new “executive operating committee” will be made up of executives Brian Ringer (CTO), Paul Springer (SVP/Americas), Thorsten Schliesche (SVP/Europe), and new CFO Ethan Rudin.
The company also announced investment firm Columbus Nova has taken some ownership of the company. Columbus Nova, by the way, owns Harmonix, which owns the Rock Band videogame franchise. Rhapsody says it will “add resources to enable the company to accelerate its efforts in Europe and emerging markets.”
Sandoval puts Rhapsody’s fortunes in the larger context of the tough go online music services have had.
“In the post-Napster era, we’ve yet to see a single digital music distributor generate lasting or significant profits,” he wrote. “More recently, Spotify’s losses have grown. Grooveshark has cut the size of its workforce. Rdio has struggled to keep pace with Spotify in terms of building an audience. In this environment, Rdio and others are trying to stay competitive. Operators of these sites say the obstacles are significant, as consumers remain reluctant to pay for songs and the cost of licensing music is still too high” — the two very points Hill made last week in RAIN.
Read Rhapsody’s official announcement here. Read Sandoval in The Verge here.