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RealNetworks readies new music service

Company's "groundbreaking" announcement expected to concern a new version of its Rhapsody subscription-based music program.

Ten years after the release of its first RealAudio multimedia software, RealNetworks is hoping to kick-start its second decade with a new push into digital music.

In New York on Tuesday morning, during a fete complete with a free concert in Manhattan's Radio City Music Hall, the company is slated to make what it has called a "groundbreaking" announcement for the future of its digital music business.

Though executives have not released details on the announcement, the company has previously said it's been nearing the release of a new version of its popular Rhapsody subscription-based music program. That new version would support Microsoft technology that would let songs be downloaded to some portable MP3 players, the company has said.

In an e-mail to RealNetworks customers last week, Chief Executive Officer Rob Glaser touted the company's role in the decade-long Internet multimedia business and asked computer users to stay tuned to this week's news.

"We're as committed to innovation over the next 10 years as we have been for our first 10 years," Glaser wrote. "I know this sounds like an ambitious statement, but we've got some stuff coming very soon that I think you will agree is truly a breakthrough."

The release of the new music products is a key step for RealNetworks, which is struggling to find an independent path between Apple Computer's iTunes and the Microsoft-allied companies such as Napster.

The company's Rhapsody subscription service has grown steadily over the past several years, now serving as the foundation of music services, which also include a paid Net radio product, that the company says have captured .

But Rhapsody is largely the product of Listen.com, a San Francisco company RealNetworks bought just days before Apple launched its iTunes store. A revision of Rhapsody would be the first time the product has been substantially overhauled since moving under RealNetworks' corporate banner.

Analysts say RealNetworks also has to make a compelling pitch to the music-listening world as to why its service, rather than Apple's or Napster-- which was the first subscription service to allow downloads to MP3 players--is worthy of $10 or more a month.

"It is going to be imperative for them to do a little more than just say, "Here's our version,'" said GartnerG2 analyst Mike McGuire."They have to show why this is a better way."