RealNetworks and Viacom have announced that Rhapsody, their joint venture into the foray of digital music, will be spun off into an independent company.
RealNetworks currently holds a 51% stake in the joint venture, with Viacom in possession of the remainder. RealNetworks will pay $18 million, the Rhapsody brand name, and certain other assets in exchange for stock in the new company.
"Separating Rhapsody into its own independent company is a significant first step in making RealNetworks a more focused and profitable company," said RealNetworks president and acting CEO Robert Kimball in a statement. "Rhapsody will be the largest pure play digital music service in the market. We have provided Rhapsody with the right team, and financial and intellectual property assets to succeed in the competitive market for digital music."
Once the company has been spun off, both parties will lose operating control but will maintain a minority stake in the company. The deal is expected to close by the end of the first quarter of the year.
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