RealNetworks stock dipped more than 7 percent today, reversing the boost the stock got the day before when its Rhapsody subscription-based music service was approved as an application for the iPhone and iPod touch. A key analyst downgraded his rating for RealNetworks stock, saying the new app doesn't have much potential for driving Rhapsody subscriber growth.

J.P. Morgan analyst Vasily Karasyov cut his rating on RealNetworks stock from neutral to underweight. Here's a summary of his analysis (via Barron's):

As for Rhapsody, he sees only limited potential for new subscriber acquisition; he thinks the current subscriber base of 750,000 reflects the existing demand for a subscription-based music service, “irrespective of the device on which it’s available,” and adds that he does not expect the new application “to reverse the challenging trend.”

Karasyov also noted the possibility that Real may have to pay damages to VeriSign following an arbitration ruling.

See also: Hands-on: Rhapsody on iPhone