The deal will combine the subscriber bases of the two largest premium on-demand music services in the U.S., adding as many as 700,000 subscribers to Rhapsody's base of 1.5 million.
"This is a 'go big or go home' business, so our focus is on sustainably growing the company," Jon Irwin, president of Rhapsody, said in a statement.
We took a look at 10 more players and systems in the online radio space trying to take Irwin up on that advice by taking a bite out of Sirius XM, Pandora and Rhapsody -- many of them doing so through either free services or unique features.
The gaming community may fuel another challenge to the satellite radio company.
The popular Europe-based service Spotify, though initially plagued by licensing issues, hit the U.S. this past summer and has been expanding its reach by leveraging the power of Facebook. Spotify has more than 10 million registered users, with more than 2 million paying subscribers in Europe and the U.S. paying for premium (ad-free) tiers. Spotify promotes "on-demand access, with no buffering" to a library of more than 15 million million songs and the ability to import MP3 files. More unique is its social media approach. Playlists can be shared, and 250 million of them have been opened up to all users. Music choices can also be shared via Facebook, Twitter, email and SMS. As part of its U.S. launch, Spotify has announced a variety of corporate partnerships, among them deals and promotions with Coca-Cola (KO - Get Report), Chevrolet, Motorola (MOT) and Reebok. Biggest of all, perhaps, is its involvement with Facebook's new music sharing service. Ultimately, Facebook users will be able to see what their "friends" are listening to and listen in on that music.