For Real Networks' Rhapsody digital music service, there's no place like home.

The company has teamed with TiVo to bring subscription-based on-demand streaming music into the living room directly from Internet-connected TiVo digital video recorders.

For subscription music services and Internet radio outlets, the deal serves as a blueprint for how Internet-based music can crawl out of obscurity and into the mainstream.

Previously, subscribers to Rhapsody and other such services and Internet radio feeds who wanted to hear their music through their home entertainment system needed to connect their computer to the stereo via a special digital media adapter. The only exception is the Sonos Internet radio system, an expensive option for a device that serves just one purpose.

The TiVo deal eliminates the need for the PC and the media extender altogether. And while that's good news for Rhapsody subscribers who may also own a TiVo, its primary purpose is to expose Rhapsody to new, tech-savvy subscribers.

The deal immediately puts Rhapsody in front of 1.5 million owners of broadband-connected TiVos and lets them experience the service using a TiVo interface with which they are already familiar. About half of these people regularly use the various broadband applications that TiVo makes available to them, such as the ability to download movies from Amazon's UnBox service. While movies and music can be accessed from a PC, there is a pressing need to access such content directly from devices more specifically built for entertainment content.

This is a continuation of our strategy of taking Rhapsody off the PC and onto new devices, Rhapsody senior VP of music products Rob Williams says. It moves us out beyond the computer music aficionados. There's certainly a limited appeal to a service that is PC-focused.

Sound familiar? Rhapsody and virtually every other subscription music service (of which there are now far fewer) said the same three years ago when they introduced MP3 players using Microsoft's PlaysForSure technology that, for the first time, let users transfer subscription music to a portable device.

That hardly provided the spike in subscribers these services so desperately needed. But extending subscription music into home-based devices is altogether different, primarily because Apple does not have the same dominance over the home music environment as it does with the iPod.

Apple TV is just another digital media adapter that streams content from the home computer to the entertainment system. It does not feature direct Internet access to anything, which some critics consider a major flaw. So the market is ripe for a competing solution.

However, there are challenges. While an innovative device, TiVo is still a rather niche product. To truly take off, more traditional stereo equipment manufacturers like Denon, JVC and Sony will need to add direct Internet access and subscription music software to their products. ABI Research analyst Steve Wilson says that while it makes perfect sense for them to do so, few have made the effort to date outside of videogame console manufacturers. Of the 184 million digital media adapters he expects will be in U.S. households by 2012, 85% are expected to be videogame consoles.

Those embedded platforms are fairly complex to develop, he said in a recent podcast. I can understand why it takes a while to get to market. I expect it will continue to take time for more to do so.

That process is starting now. Along with TiVo, Denon has already introduced two table-top stereo systems featuring Wi-Fi connectivity for access to Internet radio and services like Rhapsody. Williams says Rhapsody is working with several stereo equipment manufacturers on additional products expected to find their way to retail shelves next year.

But don't expect Apple or Microsoft to help matters much. Both want the home computer to remain the center of the home digital entertainment experience. In August, Microsoft launched another massive PR blitz around the new generation of its Media Center Extender initiative -- devices designed to bridge content from a home PC to a home entertainment system.

Yet according to ABI's Wilson, as long as these devices are seen as mere extensions of a home computer rather than a source of entertainment in their own right, demand will remain muted.

These devices are going to connect directly to the Internet, he says. It's quite a bit easier for consumers to get to content than when they have to go through their home network.

And the data back that up. According to Williams, Rhapsody subscribers accessing the service through the Sonos system -- which doesn't require a PC -- listen to three times more music than the average Rhapsody customer.

The connected approach, where everything in the home knows how to talk to the Internet, is much more robust than a hub-based approach, where you have several semi-dumb devices that all have to talk through a PC, he says. They are going to be our most avid and addictive users.

Reuters/Billboard

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