The High Cost of Selling Cheap Music Services

After writing about how Napster renegotiated its deals with record labels to offer its music subscription service at a lower price, I called RealNetworks, which offers the Rhapsody service, to see if its executives were excited about cutting similar deals that would allow it to offer its own $5-a-month music service. For years, after all, people trying to popularize music subscriptions — which allow you to listen to anything you want for a monthly fee — have been telling me the concept is great but the price the record labels want is too high.But Mike Lunsford, Real’s executive vice president, was anything but excited. Sure, more people will want a service that costs $5 a month than one that costs $13 a month. (Indeed, the new $5 offer is better because it also includes five MP3 tracks to keep each month.)
http://bits.blogs.nytimes.com/2009/05/20/the-high-cost-of-selling-cheap-music-services/