During the most recent second quarter, RealNetworks (RNWK) clocked a net loss of $29.5 million on revenues of $88.9 million. That is a serious revenue dip, thanks partly to the Rhapsody spinoff, but a significant reduction in losses. Meanwhile, the smoke is still settling on a massive restructuring that witnessed 85 executive cuts and shifts away from underperformers like Rhapsody. “Our restructuring efforts are ahead of plan,” Kimball told investors.

But, where’s the beef in music? Tough question, though RealNetworks is hoping for improved ringtone, ringback tone, and full-track stream contributions. Before the year ends, Sprint is tapping RealNetworks to power a storefront that will include tones and on-demand songs, just one partner in a broader, global push.

In Los Angeles recently, Spotify CEO Daniel Ek talked about the halo effect that artists can experience on the application.  Cultivating fans in far-flung countries, generating upswings in related, non-recording purchases.  A return towards the album, and beyond that, a ripe community of downstream API developers.

Bloggers were lapping it up, even predicting an imminent launch in the US.  But Edgar Bronfman is over freemium, over the idea that somehow freebie music communities convert towards premium in a meaningful way.  Even in Europe, premium subscribers are a small percentage of the Spotify total (less than 4 percent), despite the swell of publicity and demand.

And, for that matter, advertisers are hardly banging down the door – while testing at Midem, the French version was mostly filled with Spotify ‘house ads’ and plugs for label content.  In a similar test last summer in London, the British version suffered a similar problem.

That was an issue Amanda Marks of Universal Music Group publicly raised last year.  More recently, Edgar Bronfman said it out loud, dismissing the freemium approach in no uncertain terms.  The quote has been hashed and rehashed, but neither are playing the tech-chic popularity contest.  They need to license concepts that make money, not win praise from Spotify worshipers and ‘with it’ bloggers.  At this point in the game, looking cool is an expensive endeavor.

But the buoyant hype around Spotify has a deadweight counterpart, an underachieving sibling that rarely gets mentioned these days.  As the drool drips on Spotify, a once-promising Rhapsody is getting spun off, zipped up and mailed away by RealNetworks and MTV Networks.  Even after millions in commitments and huge amounts of advertising.

Yet, subscribers slumped towards 675,000 at the end of last year, a drop of 13 percent year-over-year.  The number itself is hardly zero, but nothing near the initial expectations heaped upon it – and the broader subscription space – in the early 2000s.  Yet this is quite an excellent application, one that was well ahead of its time – but ultimately, a niche play.

So, what again is the difference between Spotify and Rhapsody?  Sure, Spotify is freemium, and Rhapsody starts the conversation with premium (limited trials and teasers notwithstanding).  But strip away those models, and the apps are quite similar.  Rhapsody was just as dazzling in 2002, just like Spotify splashed onto the scene in 2008.  But Rhapsody was always locked in its cage, away from freebie paws.

And maybe that’s the point.  The history on Rhapsody (and similar competitors) is all-too-familiar to Bronfman and other executives looking at the same problem.  And simply flipping the model around on the cloud hardly seems like the solution.

Paul Resnikoff, Publisher.

*The planned merger between Live Nation and Ticketmaster has hit a snag in the UK.  The UK Competition Commission is reopening the matter following a complaint by German-based ticketing agency CTS Eventim, pushed through the Competition Appeal Tribunal.

*Rhapsody lost more subscribers during the recent quarter, according to financial disclosures from RealNetworks (RNWK).  At the end of the year, the service claimed 675,000 subs, down 15.6 percent from last year.  That was part of a broader loss of $13.3 million, larger than analyst expectations.  RealNetworks, along with MTV Networks, are now spinning Rhapsody into an independent service.

*Ford officially disclosed its partnership with Gracenote, one focused on in-dash system Sync.  Gracenote brings voice activated controls, an album cover database, and playlist creation technologies to the table.

*Also on the automotive front, Volvo disclosed plans to install a touchscreen, rear seat entertainment system on its 2010 XC70.  The system includes broadband, WiFi and a 500GB hard drive, and partners include Gracenote, Sprint, and Azentek.

*Want to license?  Need a license?  This is a crowded space, and Indie Music Tech has assembled a long list of players.

*Want to learn Leadership Lessons from a Dancing Guy?  A short-but-potent presentation by Derek Sivers from the TED Conference is starting to make the rounds.

*Music stocks were mostly tame on Friday, a reflection of broader market movements.  The Dow (DJIA) edged upward 0.44 percent to 10,099.14, and Apple (AAPL) gained less than a percent to $200.38.  Rovi Corporation (ROVI) was among the bigger movers, jumping 9.61 percent to $31.02 following a positive earnings report.