Free version of Rhapsody adding ads

RealNetworks is stepping up its game in the increasingly competitive online music biz.

Company showed off an array of upgrades to its Rhapsody digital music service at a Tuesday news conference at Radio City Music Hall, including portable subscriptions and 25 free songs per month to induce potential customers to try its software.

Real will continue to compensate labels with the same royalties for non-subscribers it pays when subscribers listen to songs. It will subsidize those fees by integrating advertisers into the free version of Rhapsody, beginning with Chrysler.

By including 25 free songs and integrating RealNetworks’ 99¢ per song download store into Rhapsody, company’s hoping it can get customers to start using the service and then entice them to become paying listeners.

New portable service, which lets users move any of Rhapsody’s million-plus song library to compatible devices, uses the same Microsoft technology that competitor Napster has already implemented in its identical Napster to Go offering.

Real has more than 1 million subs to its Rhapsody and premium radio offerings. That puts it well ahead of Napster but still far behind Apple’s iTunes in the overall online music market.

RealNetworks topper Rob Glaser has been a longtime rival and critic of Microsoft founder Bill Gates, but his company has increasingly been using the tech giant’s digital media software for its online content offerings.

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