March 8, 2006, 12:00 AM

RealNetworks doubles digital music sales in 2005

A record number of subscribers at Rhapsody, a digital music service, helped RealNetworks increase music sales by 29% in the fourth quarter and 50% for 2005

A record number of subscribers at Rhapsody, a digital music service, helped RealNetworks Inc. increase its digital music sales by 29% in the fourth quarter and 50% for 2005.

In the fourth quarter RealNetworks, No. 218 in the Internet Retailer Top 400 Guide to Retail Web Sites, posted digital music sales of $26.1 million, a 29% increase over music sales of $18.5 million in Q4 2004. For 2005 RealNetworks posted online music sales of $97.5 million, a gain of 50% over $48.7 million in 2004. Overall digital music sales represented 30% of total sales of $325.1 million in 2005 vs. 18% on total sales of 2004’s $266.7 million.

The Rhapsody music service, which includes access to more than 400,000 music tracks, now has more than 2.2 million subscribers. The company is expanding further into the digital games business following an October legal settlement with Microsoft Corp. The settlement calls for Microsoft to pay RealNetworks $301 million in cash and provide services over 18 months in support of RealNetworks` product development, distribution and promotional activities. Microsoft also will integrate the Rhapsody digital music service more prominently into segments of MSN.com, including the MSN homepage, MSN Music, MSN Search and MSN Messenger.

“2005 was a watershed year for RealNetworks,” says chairman and CEO Rob Glaser. “We achieved record annual revenue and dramatically grew our business through both organic growth and acquisitions. “

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