February 23, 2010, 12:00 AM

Annual digital music sales remain essentially flat for RealNetworks

RealNetworks Inc. finished off 2009 with a slight increase in digital music sales but a drop in total revenue. Music sales increased by a scant 0.1% while total revenue declined 7.0%.

Zak Stambor

Managing Editor

RealNetworks Inc. finished off 2009 with a slight increase in digital music sales but a drop in total revenue.

For the year ended Dec. 31, RealNetworks, No. 96 in the Internet Retailer Top 500 Guide, reported:

  • Sales for the online music service Rhapsody increased year over year 0.1% to $160.9 million from $160.7 million in 2008.
  • Total revenue dropped 7.0% to $562.3 million from $604.8 million.
  • Digital music revenue accounted for 28.6% of total sales compared with 26.6% in 2008.
  • Technology products and service revenue declined 7.3% to $191.5 million from $206.6 million in 2008.
  • Games revenue declined year over year 8.8% to $122.8 million from $134.6 million.
  • Sales for media software and services dropped 15.4% to $87.1 million from $102.9 million.
  • Net loss was $212.3 million compared with a net loss of $243.9 million in 2008.

“The severe recession in 2009 hurt both our revenue and profitability for the year," says president and acting CEO Bob Kimball. "While we don`t expect that overall trend to change in the first quarter, we are aggressively moving to transform RealNetworks into a more simple and focused company that delivers value to its shareholders.”

 

For the fourth quarter RealNetworks also reported:

  • Sales for Rhapsody declined year over year 14.4% to $37.6 million from $43.9 million in 2008.
  • Total revenue dropped 4.7% to $145.5 million from $152.6 million.
  • Digital music revenue accounted for 26.0% of total sales compared with 28.8% in 2008.
  • Technology products and service revenue increased 3.6% to $54.3 million from $52.4 million in 2008.
  • Games revenue declined year over year 8.9% to $30.7 million from $33.7 million.
  • Sales for media software and services increased 0.9% to $22.9 million from $22.7 million.
  • Net loss was $13.3 million compared with a net loss of $236.2 million in 2008.

Earlier this month RealNetworks announced that Rhapsody America LLC will become an independent company by April after being spun off by majority owner RealNetworks Inc. and MTV Networks. RealNetworks owns 51% of Rhapsody, while MTV parent Viacom International Inc. owns the remaining 49% of the online music service.

 

RealNetworks will contribute $18 million in cash to the reformed Rhapsody in exchange for convertible stock, the company says. MTV will provide advertising support. RealNetworks and MTV each will own less than 50% of the spin-off, with minority investors holding the remaining stake, according to a recent company filing with the U.S. Securities and Exchange Commission.

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