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Rhapsody's UnRadio with T-Mobile: How it measures up

UnRadio straddles the gap between a Pandora-like free service and the typical subscription streaming offer, as Rhapsody experiments to find a sweet spot.

James Martin/CNET

Another week, another new streaming music service.

On Wednesday, Rhapsody and T-Mobile unveiled UnRadio, a partnership for a streaming radio-like service that will be available to anyone but offered at a discount -- or free -- to T-Mobile customers. The service lets you listen to a programmed station or a station you define based on a specific artist or song, and you can listen on demand to songs you heard earlier and marked as a favorite, without ads or song-skip limits.

"We wanted to look for even more growth, so we had to look for more pain points for customers," said Paul Springer, Rhapsody's senior vice president of the Americas. "It became really clear right away that there is a spot between free services and full on-demand."

In the past few years, streaming-music services become the recorded music industry's most promising spot for growth. Revenue from subscription and streaming services topped $1 billion for the first time last year, but the subscription model has yet to prove it can be profitable.

Rhapsody UnRadio Rhapsody

The opportunity has spurred increasing competition in streaming services. Hot startups like Spotify compete with rivaling services from giants like Google, with new entrants cropping up regularly; already this year, Beats Music and Amazon have launched new services, and YouTube is reportedly launching another this summer. But the uncertainty about a model that hits the right notes mainstream consumers has resulted in a lot of experimentation, like UnRadio and Amazon's offering introduced last week, which bundles its subscription music service as part of Prime, the $99-a-year membership program that is best known for its free second-day shipping.

With UnRadio, Rhapsody decided to stay in the middle of the road.

Its price at $4.99 a month literally runs right down the middle -- halfway between a no-cost, ad-supported online radio service like Pandora and the typical $10 a month fee that other subscription services like Spotify and Beats Music offer.

For T-Mobile customers on an unlimited data plan, UnRadio is free, while other T-Mobile customers can get it for a dollar discount and are charged simply as an additional item on their existing phone bill. It's not a groundbreaking tactic: Telecom partnerships have been key elements to the growth of most stand-alone subscription music services. It's how Spotify grew quickly in Europe, and such partnerships have been a key focus for Rhapsody itself to stoke its own growth abroad recently. And billing through the carrier removes one more hurdle, method of payment, that could keep somebody from signing up.

However, the most noteworthy US partnerships of this type lately -- an AT&T deal with Beats Music and a Spotify partnership with Sprint -- are marked by offering partner customers extended free trials of their subscription service and then charging individuals the same amount anyone else would pay. (Both the AT&T-Beats offer and the Sprint-Spotify offer have discounted options for customers on a family plan.) UnRadio includes an ongoing discount.

The offering also bridges the difference between free services, which don't allow you to pick the specific song you want to hear, and premium subscription ones, which have nearly no limitations on what you listen to. UnRadio allows some on-demand listening, but only 25 total songs that you mark as favorites.

Rhapsody was a pioneer in subscription streaming music, launching in 2001 and essentially inventing the model of an all-you-can-eat music service for a monthly price. But being first meant Rhapsody came a little too early. It has been overshadowed in recent years by the likes of Spotify, Beats Music, and the offerings by giant companies like Google whose sheer reach gives them automatic recognition.

The T-Mobile partnership is the most high-profile for Rhapsody yet in the US.

"This was the fastest that we've ever done carrier partnership," Springer said. Rhapsody already had a "fully baked idea" for a product like UnRadio, and T-Mobile suited the concept because the carrier is"aggressive and willing to try new things," he said.

And new things are what the music industry needs, at least until it can figure out how streaming will be sustainable.

"Everybody in the whole industry is looking to how you take this massive audience of free users and move them to subscription," Springer said. "Everyone knows subscription is the future."