RealNetworks Stock Gives Back IPhone App Boost

NEW YORK (AP) — The stock of RealNetworks Inc. sank Friday, giving back the gains it made the day before, when it said Apple Inc. had allowed RealNetworks' Rhapsody music service on to the iPhone and iPod Touch.

The stock fell 26 cents, or 7.1 percent, to $3.38 in morning trading, after rising 7.1 percent the day before.

J.P. Morgan analyst Vasily Karasyov downgraded the stock Friday morning from "Neutral" to "Underweight," saying he sees no potential upside from the Apple approval.

"We see only a limited potential for new subscriber acquisition," Karasyov wrote. Rhapsody's 750,000 subscribers in the second quarter "reflects the existing demand for a subscription-based music service irrespective of the device on which it's available."

There's also a risk the RealNetworks may have to pay damages to VeriSign Inc. following a recent arbitration ruling, he wrote.

Seattle-based RealNetworks said initial application download will be free for iPhone and iPod Touch users but new subscribers will have to pay $14.99 a month if they want to try it for longer than seven days.

The service will allow users to queue up any of some 8 million songs, and create custom playlists that will stream to the device as long as the user is receiving a cellular signal or is in a Wi-Fi hot spot.

The application is an improvement on Rhapsody To Go, which allows subscribers to load songs onto their Windows Media Player-enabled phones and digital music players when connected to a computer for later playback.