Related Party Transactions

3 Months Ended

Mar. 31, 2012

Related Party Transactions

Note 16. Related Party Transactions

Transactions with Rhapsody. See Note 4 Rhapsody Joint Venture for details on the 2010 restructuring transaction involving Rhapsody. Subsequent to the restructuring transaction, we are obligated to provide Rhapsody with certain support services unless earlier terminated by Rhapsody. These support services are expected to be completed during 2012. The support services include information technology and limited operational support provided directly to Rhapsody. The amount of these and other support service costs were based on various measures depending on the service provided, including vendor fees, an allocation of fixed costs and time employees spend on providing services to Rhapsody. RealNetworks allocates the cost of providing these support services and records such allocation as a reduction to the related expense in the period for which it was incurred. During the quarters ended March 31, 2012 and 2011, we charged Rhapsody $0.3 million and $0.9 million, respectively, for the support services.

Transactions with LoEn Entertainment, Inc. In 2008, RealNetworks acquired approximately 11% of the outstanding shares of LoEn Entertainment, Inc. (LoEn). The Company paid market price for the common shares of LoEn, which are traded on the Korean Securities Dealers Automated Quotations. The Company’s investment in LoEn is treated as an equity investment of a public company and is marked-to-market each period with resulting gains or losses recognized in accumulated other comprehensive loss as unrealized holding gains/losses on investment. During the quarters ended March 31, 2012 and 2011, we recorded revenue from LoEn of approximately $3.9 million and $4.1 million, respectively. This revenue consisted primarily of sales of application service provider services, which include sales of ringback tones, music-on-demand, video-on-demand, and inter-carrier messaging services. Associated with these transactions, the Company also recorded accounts receivable of approximately $1.5 million as of March 31, 2012. Accounts payable and cost of revenue balances associated with LoEn as of and for the quarters ended March 31, 2012 and 2011 were nominal.