Seattle's newest digital music company is also one of its oldest. It's rolling out a series of changes -- and hoping to get more people tuning in -- as it makes its latest debut.

Rhapsody International Inc., officially spun off from RealNetworks and settling into its new downtown Seattle headquarters, is relaunching this morning with a lower standard price -- a $9.99 monthly subscription for unlimited music on computers and home media players, and playback on one portable media device.

In addition, the company today is releasing its Rhapsody application in the Android marketplace. The app for Google devices supplements Rhapsody's existing iPhone app, which executives credit with increasing user engagement with the Rhapsody service. It's part of a strategy to expand the reach of the Rhapsody service. Leaders of the new company say they hope to make it profitable later this year.

Jon Irwin, new Rhapsody president. (Dan Schlatter/PSBJ)

"We've got a large fan base ... and we heard loud and clear -- they wanted a more affordable price, and they wanted greater portability," said Jon Irwin, Rhapsody's president, who is leading the new company of 150 people in Seattle and San Francisco. "That's where we're headed with these two announcements."

Under the company's previous pricing structure, it charged $12.99 a month for unlimited streaming to computers and home media players, but not to portable devices. That will be replaced by the new $9.99 Rhapsody Premier subscription for streaming in the home and playback on one device. The company will continue to offer its $14.99 option, previously called Rhapsody to Go, for people who want playback on up to three devices.

The changes mean that people who subscribed to Rhapsody at $14.99/month to listen on just one portable device (such as the iPhone) will be able to switch to the lower-priced plan. Irwin credited the changes in part to newfound flexibility from music labels. In addition, he said, the company wants to boost subscriptions -- countering recent declines -- and encourage existing subscribers to keep renewing.

The lower prices are aimed in part at appealing to people who might have been satisfied with pure radio-style Internet music services -- such as the free Pandora service -- which let people listen to music by genre or style, but don't give them the control to pick specific songs, as paid subscription services do.

Rhapsody traces its roots to the early part of last decade, as several companies attempted to create viable and legal alternatives to the original Napster file-sharing service. RealNetworks, which launched its own MisicNet venture with major music labels in 2001, expanded its efforts with the acquisition of San Francisco-based Listen.com and its Rhapsody music service for $36.5 million in 2003.

After seeing Apple's iTunes store rise to dominate the digital music market, RealNetworks partnered with Viacom's MTV Networks in 2007 to create the Rhapsody America joint venture. Rhapsody is now being spun off as an independent company as part of a larger effort by RealNetworks to narrow its focus. RealNetworks and Viacom are major shareholders in the new company, but neither has a controlling interest.

The situation gives the new Rhapsody the independence of a startup but the user base and resources of an established company, said new president Irwin, who was previously the Rhapsody America chief operating officer. For example, he said, Rhapsody will be able to seek deals with a variety of mobile carriers, maintaining but also expanding beyond the relationship that RealNetworks established with Verizon Wireless.

The privately held Rhapsody is on track for $130 million in annual revenue out of the gate, and it's starting with roughly $18 million in cash to work with, Irwin said. Two board seats are held by RealNetworks, and two by Viacom. The company expects to announce a fifth, independent board member in the coming weeks.

The new structure also would allow Rhapsody to take on additional investors in the future. Irwin didn't rule out the possibility of an IPO or other deal down the road, but he said the focus now is on running Rhapsody as a successful private business. The goal is to reach profitability by the fourth quarter of this year, he said.

Among other changes, the new company has a new logo (pictured above) that combines an image of a guitar pick with a "play" button. Rhapsody's previous logo conformed to RealNetworks' branding.

Another big difference for Rhapsody these days results from the changing marketplace -- the ability to establish a presence on smart phones, such as the iPhone app that Rhapsody released last year, and the Android app coming out today. Rhapsody is working on a BlackBerry app but waiting to see how the Windows Phone and Palm markets evolve before proceeding there.

Irwin described the usage of the iPhone app as "extremely encouraging," with more than 1 million downloads so far, not only by existing users but also by people who are new to the Rhapsody service.

"The ability to drive new subscribers to Rhapsody has been very significant," he said.