Rumours of changes at the top for Rhapsody have been bubbling for a few days, but yesterday they were confirmed: the subscription music service has a new investor in Columbus Nova Technology Partners, but its president Jon Irwin is stepping down, and the company is laying off around 15% of its staff – 30 people.
Rhapsody’s chief financial officer Adi Dehejia is also leaving the company, but has been replaced already. Rhapsody has a new executive committee of CTO Brian Ringer, SVP Americas Paul Springer, SVP Europe Thorsten Schliesche and the new CFO Ethan Rudin, who joins from Starbucks.
“Concurrent with CNTP’s investment, Rhapsody’s Board has decided to rebalance and restructure US operations and add resources to enable the company to accelerate its efforts in Europe and emerging markets,” explained the company’s statement last night, after The Verge broke the news.
Rhapsody styles itself as “the original on-demand music service”, hammering home its veteran credentials in the digital music market, having launched in 2001.
Yet the challenge for the company in recent years has come from much younger rivals like Spotify and Muve Music, while its acquisition of Napster in late 2011 has yet to provide evidence of a surge in the company’s business in Europe. In 2012, Rhapsody reported revenues of $143.7m and a net loss of $12.3m, compared to Spotify’s $577.1m revenues and $77.9m loss for the same year.
That clearly shows Rhapsody’s challenge now: it may be less unprofitable than the new darling of subscription music, but it’s been stuck around the 1m subscribers mark in the US since 2011, and aggressive global expansion for Napster will require the kind of investment that’s fuelling such big losses for Spotify.
That would seem to be the rationale for the new investment, and by extension the leadership changes. Napster launched in 14 more European countries in June 2013, but it remains to be seen whether Irwin’s plans to boost growth in the region with tiered “laddering” pricing will be boosted or killed by the new leadership.