When Assumptions Lead to Failures

Amy Lima
The Startup
Published in
4 min readSep 4, 2020

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The Rise and Fall of Rhapsody, the Revolutionary Streaming Service You Probably Never Heard About

Photo of the Rhapsody Streaming Service interface circa 2001
Rhapsody’s original interface in 2001

Background

The year is 2001, and the music consumption ecosystem was rapidly (and radically) changing. Apple had just launched iTunes, and by December of that year (2 months after the revolutionary iPod was released), Rhapsody was born.

Rhapsody, although not widely recognized (or even known), was actually the first music streaming service to come to market, and helped pioneer the streaming ecosystem we know today. At $9.99 per month, you could stream any music in its library (then approximately 350k songs) through its desktop app.

Although theoretically holding the first player’s advantage in the streaming world, Rhapsody launched at a time where its indirect competitors were far more popular and meeting its users’ needs. Unlike iTunes, Rhapsody users could not keep their songs — paying a subscription merely gave you access to the service’s catalogue, but you couldn’t locally download any music files to your device. At a time where music was just shifting from physical to digital consumption, the concept of “ownership” over your music was still high on a user’s priority list. Beyond this, the service existed only as a web app (long before the days of the smartphone and non-native mobile apps); with the prominence of [illegal] peer-to-peer file sharing services such as Limewire and Napster (which Rhapsody ultimately acquired and subsequently rebranded under), users could locally-download mp3 files that could be transferred onto a physical device like the iPod, making the case for paying for music in the first place a hard sell.

Assumptions

There were a few key, faulty assumptions taken on behalf of both Rhapsody and the wider recorded music industry (namely record labels) that contributed to Rhapsody’s demise.

Consumers’ Willingness to Pay: Rhapsody, unlike its eventual streaming competitors, never offered a free (or “freemium,” popularized by rival Spotify) tier for their service. Rhapsody’s late president Jon Irwin made a noble case for maintaining a monetary value on music, disparaging Spotify’s model saying, “They’re just giving it away, like, ‘Oh, I don’t have to pay for it. It promotes the sense to…

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Amy Lima
The Startup

Product Designer, first-generation American, deeply human. www.amylima.design