Rhapsody hits 2 million paying subscribers, thanks to Europe, LatAm… and Pandora?

Music subscription pioneer Rhapsody has more than two million paying customers now, and is expanding in Latin America, the company is set to announce Tuesday. But a big part of Rhapsody’s growth strategy going forward will be a more radio-like approach that pits the service more directly against Pandora (S P) — which is an interesting twist for a company that long fought to establish the idea of limitless music streaming.
Rhapsody first launched its service in late 2001, becoming one of the first and arguably the longest-standing music subscription service. Long before Spotify, the company tried to convince consumers of the idea of unlimited access to music streaming. Rhapsody grew slowly over the first few years, but managed to stick around while others failed, and picked up a few of those failing services in the process, most notably Yahoo (S YHOO) Music in 2008 and Napster in 2011, reaching a total of one million paying subscribers by the end of that year.
Since then, Rhapsody has been using the Napster brand to grow its business internationally, and that has apparently been working: Rhapsody’s SVP for the Americas Paul Springer told me last week that the company’s growth has primarily been driven by Europe and Latin America, thanks largely to carrier partnerships in those markets. Those partnerships help with billing, but also add a huge marketing muscle, Springer said.
But the biggest boon could just be that Rhapsody is looking to expand its potential market by offering more than just the complete all-you-can-eat music bundle for $10 a month. Last month, the company unveiled a new service in partnership with T-Mobile in the U.S. dubbed unRadio. The service is basically a Pandora-like personalized radio service, but without ads, which is bundled with some data plans, and costs $4 per month for other customers.
Rhapsody is now bringing the same service to France, where it will be marketed as Napster Découverte in partnership with local mobile operator SFR. Which begs the question: Is Rhapsody’s future about being more like Pandora, or is the company still seeing the personalized radio service as a stepping stone, designed to eventually get people hooked on the full-rpiced all-you-can-eat subscription? “I’m perfectly happy with lots of unRadio customers in perpetuity,” Springer told me. But the company isn’t giving up on full-priced subscriptions either. “We offer a portfolio of products,” he said, adding that Rhapsody may even add additional services in the future.