Rhapsody Starts Its New Life With Price Cut and an Investment From Universal Music

Rhapsody starts life as an independent company this month and the music subscription service is marking the occasion with a price cut: It is lowering the price of its all-you-can-eat offering from $15 to $10 a month.

The service, formerly a joint venture between RealNetworks (RNWK) and Viacom’s (VIA) MTV, has two new investors. Real and Viacom each own about 47.5 percent of the company, and Vivendi’s Universal Music Group now owns a minority stake–something less than five percent. An undisclosed investor owns something much smaller than that.

Rhapsody’s managers will tell you that their new corporate structure gives them a better shot at turning around the music service, which has lost money for years and has recently been losing subscribers as well–it’s now down to 675,000. They predict they’ll generate $130 million in revenue this year and turn profitable by the end of 2010.

But consumers won’t care about any of that. The core question about them: Is there any amount of money they’re willing to pay for a monthly music subscription that lets them listen to whatever they want wherever they are?

Rhapsody’s price cut brings it in line with the $10-per-month offering Thumbplay announced earlier this year. If you want to spend less, both Best Buy’s (BBY) Napster and MOG offer $5 monthly subscriptions, but neither supports mobile phones (yet), so they’re only good for people who do most of their listening within earshot of their PCs.

Meanwhile Spotify, the music industry’s great European hope, has yet to make it to the U.S. despite many months of promises and negotiations. And lots of folks insist/believe/hope that Apple (AAPL) will eventually offer some sort of subscription service, or at least some kind of portable option that involves the cloud.

In the meantime, the overwhelming majority of people who do pay for music online do it in $1 increments. Apple is still selling some two billion songs a year via iTunes.

[Image credit: flattop341]

Change Up At NBC Sports Digital; Miller Shifts To Universal Sports, Keeps Olympics

Nbc Sports Logo

NBC Sports rewrites the digital org chart, shifting Perkins Miller to COO, Universal Sports—while leaving him with responsibility for the digital side of London 2012. The rest of the rewrite shows just how layered management is at NBC Sports: Kevin Monaghan, SVP-Business Development, adds Managing Director of NBC Sports Digital Media and takes responsibility for NBCSports.com, ProFootballTalk.com, Rotoworld.com and all other digital media initiatives. Rick Cordella is promoted to VP/GM, NBC Sports Digital, from GM; he’ll run day-to day and report to Monaghan.

Miller, head of NBC Sports Digital since 2006, moves to Universal Sports as partners NBC Sports and InterMedia Partners up the emphasis on that network but keeps the Olympics. Hayle Chun will continue to oversee NBC Sports and Olympics mobile and digital distribution, reporting to Cordella for general and Gary Zenkel, EVP-Strategic Partnerships, NBC Sport, for Olympics. This was all announced by Zenkel—who in turn, reports to Dick Ebersol, chairman of NBC Sports. Got it? There’ll be a pop quiz later and maybe a pool about how many layers Comcast (NSDQ: CMCSA) leaves in place. More details on the moves here.

Miller, who managed NBCU’s investment in Universal Sports, is only one of the changes at Universal Sports, which includes adding Fox Cable David Sternberg as CEO. Founder Claude Ruibal stays as chairman.

Reliance Big Entertainment Buys 50 Percent Stake In Video Game Firm Codemasters


Reliance Big Entertainment, which owns Indian gaming firm Zapak, is buying a 50 percent stake in British video game maker Codemasters. Balderton Capital, which had accumulated a large stake in Codemasters between 2005 and 2007, is the other major shareholder; Balderton bought the Codemasters shares it didn’t already own in mid-2007—but also announced at the time that Goldman Sachs was investing $99 million in the company to help prepare it for the “digital age.” The speculation at the time was that Codemasters would soon file for an IPO.

Codemasters’ titles include popular cricket game The Ashes, as well as Formula One themed-title, F1. In its announcement,  Reliance Big Entertainment says Zapak’s “strength in mobile gaming” will help Codemasters “fully leverage” its franchise. Codemasters currently only has one title for mobile devices, according to its website, while Zapak’s Jump Games develops and distributes games across a large number of mobile operators. Zapak’s other holdings include gaming portal Zapak.com and several popular massively multiplayer online games.

Reliance Big Entertainment had said for several years it was looking for gaming-related acquisitions. Terms of this deal were not announced, although the company did say that Codemasters has more than $150 million in annual revenue.

Reliance Big Entertainment—which is controlled by billionaire Anil Dhirubhai Ambani—is probably best known abroad for purchasing a 50 percent stake in Dreamworks SKG last summer. It has also invested in other U.S. movie-production houses, including those of actors George Clooney, Jim Carrey and Brad Pitt.


Some Web Publishers Take a Pass on the iPad Launch

Lots of publishers scrambled to prep their Web sites for the Apple iPad debut. But not all of them.

Magazine trade pub Minonline has a gallery of sites that didn’t work for iPad users this weekend, presumably because they use Adobe’s Flash, which doesn’t work on the Web browser Apple uses on its gadget. One was Condé Nast’s GQ, whose front page has an item promoting…its iPad app:

Digital Daily’s John Paczkowski, a proud iPad owner, tells me that the GQ front page now looks okay from the browser of his new machine. Except if you try to play the video promoting the GQ iPad app, in which case you’ll get this message:

So that’s a little embarrassing. But not a big deal, really, since the effect of Apple (AAPL) and Adobe’s (ADBE) spat won’t be visible to most Web surfers. The iPad’s installed base, after all, is around 300,000.

In fact there, were only a few of reasons to have your site ready for the iPad on Saturday:

  • The chance to earn corporate bragging rights.
  • The chance to get on Apple’s good side and perhaps earn a spot on Apple’s “iPad ready” list. Though I know of at least one publisher that worked overtime to overhaul its site, at Apple’s prodding, and that still isn’t on the list.
  • The chance to earn a big pile of advertising dollars from marketers who wanted to be associated with the iPad’s launch.

That last one is the most compelling, of course. But my understanding is that this was a pretty binary proposition. Either your site got some of money big brands were spending to be part of the launch or it got nothing.

And if you’re in the latter group, it doesn’t matter if your site becomes iPad-ready in two weeks or two months–you’re not getting in on that bonanza.

Meanwhile, some publishers are making a point of not converting their sites into iPad-friendly formats. But that’s a different story

Meet the App Store Millionaires: The Brothers Behind Doodle Jump

Developers are eager to use the iPad as a chance to sell more expensive apps. But you can do just fine selling software at 99 cents a pop. Just ask Igor and Marko Pusenjak.

In the last year, the two brothers have sold 3.5 million copies of Doodle Jump, a simple and addictive game, via Apple’s iTunes store. That accomplishment may make them the world’s most successful iPhone and iPod touch developers.

It has certainly made them a lot of money.

The Pusenjaks’ company, Lima Sky, is a two-man operation they run out of their homes in New York and Croatia. A part-time illustrator helps them out, and they’ve recently started contracting with some freelancers for help with tasks like business development. But that’s about it for expenses.

So after Apple (AAPL) takes its 30 percent, the Pusenjaks have cleared more than $1 million a piece, before taxes.

How’d they do it?

A good game helps a lot. And Doodle Jump is a bunch of fun. But iTunes has more than 140,000 apps competing for users’ time and wallets, so breaking through the clutter is just as important.

I sat down with Igor Pusenjak last week to talk about his success, and you can see the interview at the bottom of this post. It’s a long clip, because I really like hearing Igor talk. But if you’re rushing to crank out new apps for the iPad, you may be time-pressed. So here are some key takeaways:

Developing a great app is the first part of a developer’s job. Marketing it is the second. Igor politely but repeatedly approached any and all blogs that wrote about iPhones, iPods and/or games, and used a story at one site to gin up interest from another. Landing a mention in Gawker Media’s Gizmodo was particularly helpful. The brothers recently started working with a PR firm, but until then, they did all the marketing themselves.

Work the system. In the early days of the iTunes app store, developers who updated their software would move to the top of the store’s “most recent” chart. So the Pusenjaks pushed out lots of free updates. Apple put that kibosh on that gambit last year, but the Pusenjaks have figured out a new promotional technique: Marketing tie-ins with other small developers, like┬áBolt Creative, which makes Pocket God. The Pusenjaks feature characters from Bolt’s game in theirs, and vice versa, and the two companies send customers back and forth.

Ask for help. The Pusenjaks knew that the best way to get attention would be from Apple employees who decide what apps to feature at iTunes–unlike other retail outlets, big players like Electronic Arts (ERTS) can’t simply buy preferred placement in the store. The brothers didn’t know anyone at Apple, but a friend of a friend did, and gave them an email address. Igor sent a note introducing himself over the transom, and a couple of weeks later, Doodle Jump got a feature slot.

Please your customers. Though Apple doesn’t reward developers for frequent updates, the Pusenjaks’ customers do. It turns out that free updates–new backgrounds, new characters, etc.–correlate to sales spikes, so the brothers continue to do them every few weeks. The brothers aren’t exactly sure why updates equal sales, but they have a hunch: An update gives Doodle Jump users another reason to play the game, which translates into another chance to tell friends how much they like it.

Focus: The brothers would like to work on a new game, and they’d like to port Doodle Jump to other platforms, like Google’s (GOOG) Android mobile operating system and Microsoft’s (MSFT) and Sony’s (SNE) game consoles. But they haven’t done any of that yet because they spend all their time tweaking the existing game and pushing out new updates. As long as Doodle Jump is selling–and it has been downloaded more than two million times so far in 2010, Igor notes–they can’t justify moving on to something new.

Get lucky: An endorsement from the Jonas Brothers doesn’t hurt. Even if you don’t know who the Jonas Brothers are. Igor explains in the video below.

[ See post to watch video ]

Chatroulette Creator Andrey Ternovskiy Gets an iPad, Gives Us a Peek at Version 2.0

All Things Digital intern Drake Martinet spent a long, cold night in front of the Palo Alto, Calif., Apple store. He filed this dispatch:

What do you do when you’re 17, you’re visiting the United States from Russia, and you’ve created the Internet meme of the moment?

You spend your Friday night camped out in front of an Apple store, of course.

Chatroulette creator Andrey Ternovskiy is a really big deal right now, but he had to wait in line for his Apple (AAPL) iPad along with the rest of us. It was a long wait, so I got him to spend some of it telling me about changes in store for his site, which lets you talk to, gawk at or “next” random strangers.

Ternovskiy has made a subtle but important tweak already–specifically, changes to the “reporting people” function designed to cut down on the male genitalia that famously crop up throughout the site.

I had the honor of going on Chatroulette with its creator, and the changes seem to be working, as we were “nexted” by 30-plus people without seeing a single offense. In one case, we did encounter a couple middle fingers, which Ternovskiy said is an accepted greeting on Chatroulette.

Then Ternovskiy agreed to show me what developments he planning to release next.

First, he showed me something likely to be termed “Chessroulette,” in which a chessboard or other simple game shows up on the screen and users tap out messages. The idea is that they can play instead of type.

“People meet each other and don’t have anything to talk about,” Ternovskiy said. “This is kind of like an ice breaker.”

He also showed me a nearly completed version in which, instead of seeing a small image of yourself and another small image of your Chatroulette pal, “you open the window and you just have one big picture of your partner.”

One thing that Ternovskiy doesn’t have in the works: An iPad version of the site.

Why not? For starters, the iPad doesn’t come with a videocamera. But you could presumably resolve that if you wanted to.

The bigger problem is that Apple’s gadget does not support Adobe’s (ADBE) Flash, and that’s the code that makes Chatroulette possible.

Ternovskiy said it might be possible to rewrite the site in HTML5, which would fix the problem, but he has no plans to do so.

Maybe this will change now that he has his own iPad to play with.

Here’s the video, taken in front of the Apple store in Palo Alto:

[ See post to watch video ]

Stephen Colbert Gets A Free iPad

Colbert Ipad

Stephen Colbert has been using his Comedy Central show for weeks to plead for a free iPad and last night, he showed it off. “Nevermind how I got it—I had two kidneys,” he said to audience cheers. “Luckily, there’s an app that filters urine.” Colbert also showed how the media hype over the iPad has built to a crescendo the last few days. After listing the rave reviews from various outlets, he pointed out that Newsweek was so excited about the iPad, “They made it their first non-Obama cover in 15 months.” Colbert compared the magazine’s cover treatment to a free full page ad—and contrasted it with the paid ad on the back cover for—it’s too perfect—the Amazon (NSDQ: AMZN) Kindle. Colbert’s best line was delivered as he discussed the iPad’s features, noting that “Just like the iPhone, you can’t make calls with it.”

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