Rhapsody keeps losing money despite gaining revenue

The digital music business is brutal and competitive, just ask Rhapsody International. The parent company of Rhapsody and Napster has posted a $21.3 million loss despite the fact that its revenue saw a 23% increase to $173 million thanks to its subscriber numbers exceeding 2.5 million. The reasons for the loss were unexplained but its an increase over the $14.7 million loss in 2013.

Rhapsody International, the parent company of the Rhapsody and Napster music services, posted a $21.3 million loss in 2014, even as its revenue climbed 23 percent to $173 million and its total subscribers surpassed 2.5 million. The financial results for Rhapsody were revealed this morning in a regulatory filing by RealNetworks, which remains a minority shareholder in the privately held, Seattle-based music company after spinning Rhapsody off several years ago. Rhapsody declined to comment, and the filing did not explain the reasons for the loss, which compared to a $14.7 million loss in 2013. However, the result underscores the high cost of operating a digital music business, with large marketing expenses required to bring aboard new subscribers, in addition to music licensing fees. Rhapsody has been adding subscribers despite increased competition from Spotify, Apple, Google, Amazon and many others in the broader market for digital music.