Real Sells 1 Million 49 Cent Songs in One Week

[Jason Dunn]

<div class='os_post_top_link'><a href='http://www.pcworld.com/news/article/0,aid,117528,tk,dn082404X,00.asp' target='_blank'>http://www.pcworld.com/news/article/0,aid,117528,tk,dn082404X,00.asp</a><br /><br /></div><i>"RealNetworks says it has sold more than a million songs at its online music store since slashing prices last week as part of a limited-time sale aimed at growing the user base of its new digital media software. The Seattle, Washington, company began selling music downloads at $0.49 per song, or $4.99 for most albums last Tuesday, offering the tunes at nearly half what other online music providers are currently charging. The fire sale is meant to fuel demand for the company's RealPlayer 10.5 digital media playback software and increase subscribers to Real's Rhapsody service. The move is also being seen as an attempt to take a bite out of rival digital music provider Apple Computer, which has so far lead the industry with its ITunes online store."</i><br /><br />Real is doing some chest-beating about the number of songs they were able to sell in a week: one million tracks, although at 49 cents each one has to wonder if there's any profit in there (I'd doubt it). Still, even as a loss-leader, Real is getting some new customers and that's likely their only goal.

[Mojo Jojo]

My question is, can they keep it up or will the prices climb to match everyone else's price of 99 cents.

Without any real numbers we are left to guess, and from what I can gather from various reports iTunes makes 10 cents per sale. With everything being equal (which I am sure it isn't but for guessing purposes) that means royalties and such to the labels at 89 cents.

So is Real sucking up 40 cents per song as a loss? Or roughly $400,000 this week alone?

[Jason Dunn]

My question is, can they keep it up or will the prices climb to match everyone else's price of 99 cents.

They'll go back up for sure - this is just a promotion that lasts until Labor Day (I believe).

[Felix Torres]

Assuming Real's margins mirror Roxio's, they have similar digital music profit margins: 10% on $0.99 downloads and 40% on subscriptions. So, yes, Real's million songs have cost them $400,000, so far.

In return, they got several tens of thousands (assuming each customer bought a couple of albums' worth) to install their software and sample their store.
Math says they break even if they get 4000 of those customers to sign up for rhapsody and stay for a year or 16000 for three months.

The stunt may yet pay off.
As a public company, Real will come clean next reporting period so we'll know soon enough.