RealNetworks, Viacom to spin off Rhapsody

Real and Viacom say the subscription music service will be more nimble as a standalone company. The move means that Real is satisfied to give up control.

RealNetworks and Viacom plan to spin off the Rhapsody subscription music service, the companies announced Tuesday.

Rhapsody, which has struggled for years to grow its subscriber base, was operated by a joint venture formed by Real and Viacom, parent company of MTV Networks.

At the same time, Real has decided to give up a controlling interest in the music service. The company will no longer own a majority stake in the company and will hold slightly less than 49 percent of the company's shares. Viacom owns a similar amount.

Real agreed to contribute $18 million to the new company. Under Real's control, Rhapsody has never really caught on with music fans. Rhapsody has suffered from what has dragged on most subscription services. Music fans generally prefer to own their songs; they don't want to risk losing their music libraries, should they fail to keep up their monthly fees.

The move comes after a major leadership shakeup at Real. Rob Glaser, Real's founder and former CEO, was pushed out last month, according to reports. The spinning off of Rhapsody appears to be the first significant move made by Robert Kimball, who is interim CEO and is being considered for the position permanently.

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