Music sales did number on RealNetworks

RealNetworks, the majority owner of the Rhapsody online-music service, said credit-card rejections lowered subscribers in the second quarter.

"There was an increase in consumer credit-card declines," Chief Executive Officer Robert Glaser said in an interview Thursday after earnings were announced.

RealNetworks' second-quarter revenue fell 11.1 percent to $135.7 million, the Seattle company reported. It posted a much wider loss in the period — $188.3 million, or $1.40 a share, compared with a loss of $1.3 million, or a penny a share, a year ago. But the latest quarter included goodwill-impairment charges of $175.6 million.

Rhapsody subscriptions fell to 750,000 at the end of the period from 800,000 in the prior quarter, trimming music sales 8 percent. Music revenue in the third quarter will decline compared with a year earlier, the company said.

Rhapsody is a venture with Viacom's MTV Networks, which owns 49 percent. Rhapsody had 600,000 users at the end of last year's second quarter.

"Customers may have hit their credit limit or stopped using their cards or they got a reissued card that didn't get re-inputted," Glaser said. "By the end of the quarter, two-thirds of the credit-card phenomenon was out of the way."

RealNetworks' radio subscribers fell to 75,000 from 1.2 million in the previous period because a deal with cable provider Comcast ended, Glaser said.

The results were released after the stock market closed. In after-hours trading, RealNetworks stock slipped 2 cents to $3.04.

In the regular trading session, it had gained 4 cents to $3.06. The shares have fallen 13 percent this year.