May 13, 2009, 12:00 AM

Online music sales rise for RealNetworks in the first quarter

RealNetworks, which owns and operates the Rhapsody online music service, increased music sales by 15.8% to $44.1 million in Q1. But total sales decreased year over year by 4.6% to $140.8 million and media and software-related sales declined 23.1%.

Mark Brohan

Research Director

RealNetworks Inc. posted a solid increase in digital music sales in the first quarter, but total revenue and software sales declined.

In the quarter ended March 31, RealNetworks, which owns and operates the Rhapsody online music service, increased music sales by 15.8% to $44.1 million from $38.1 million in the first quarter of 2008 while revenue for games grew 3.1% to $32.8 million from $31.8 million. At the same time total sales for RealNetworks, No. 96 in the Internet Retailer Top 500 Guide, decreased year over year by 4.6% to $140.8 million from $147.6 million, and media and software-related sales declined 23.1% to $20.3 million in the first quarter from $26.4 million in the first quarter of 2008.

In the first quarter, music and games accounted for 31.3% and 23.3%, respectively, of total revenue while software represented 14.4%. RealNetwork’s technology products and services, which declined by 15% to $43.6 million in the first quarter of 2009 from $51.3 million in the prior year, represented 31% of all revenue. RealNetworks also posted a net loss of $12.1 million in the quarter compared with net income of $2.4 million in Q1 of 2008. “In the midst of the deepest recession in decades, we demonstrated our resiliency and delivered steady overall results," says RealNetworks CEO Rob Glaser.

RealNetworks didn’t provide specific guidance but does expect overall revenue to remain flat or decline slightly in the second quarter. “Compared with the year-ago second quarter, the company expects music revenue to increase, and revenue in games, media software and services and technology products to decline,” RealNetworks says.

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