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10K Watch: Real Networks Details Promotion Costs For Rhapsody North America

This story was written by Rory Maher.
How much did it cost to market Rhapsody North America? Real Networks spent $11.2 million to promote the launch of the service last year, according to a 10K filing released this morning. Real Networks also spent $44 million in advertising with MTVN (NYSE: VIA), a requirement of its joint venture with MTV in Rhapsody. (It didn't say if the $11 million was on MTVN properties or media properties outside the MTV umbrella.) 

Separately in the filing, Real Networks said Trymedia, the online games distributor, had contributed $11.7 million in 2008 revenue since it was acquired in April 2008, which would make its total revenue for the year (before and after the acquisition) just shy of $16 million. Trymedia's lower profit margins also increased the company's total cost of revenue, according to the filing.

Also in the filin, Real Networks said it had written down $8.8 million in advance payments to content owners that it could not recoup from revenue earned in 2008.  This might explain why CEO Rob Glaser called out the music industry during the company's fourth-quarter conference call for "stifling innovation" through unreasonable licensing agreements.

By Rory Maher