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For most of 2009, plenty of music business people were legitimately excited about selling music in a subscription form.

The idea of offering unlimited downloads or streams for a flat fee seemed like it could resonate with the next generation of consumers who were weaned on the openness of the Internet; services like Napster would make it easier to discover new music, and eventually overtake the buy-by-the-song model created by Apple.

That excitement took a hit last week when Rhapsody, a subscription service owned mostly by RealNetworks, announced that it had lost over ten percent of its subscribers over the course of 2009.

For some reason, there is some variability in these figures from outlet to outlet, but both sets of numbers are troubling. Some are calling the downturn proof that the "Subscription Game" is over, and market analysts are fielding questions about whether or not it's time to sell your Rhapsody stock.

Though it's probably a little early to start throwing dirt on the entire idea of subscription-based music sales (Napster, for example, doesn't seem to be doing quite as badly), the bad news does highlight some fundamental legal problems that these services are going to face for quie a while. From Sci-Tech Today: 

One of the toughest obstacles for the Rhapsody music business is the pace of expense growth. In its most recent quarter, music sales rose 9 percent to $40.4 million, or 30 percent of the company's total revenues. Expenses rose more than twice as much, increasing 21 percent to $25 million, accounting for 62 percent of the total. As Rhapsody attracts more subscribers -- the tally rose 150,000 from a year earlier -- it has to pay more in royalties to record labels. "The ideal Rhapsody subscriber is one who doesn't use the service much because the more you use it, the more it costs RealNetworks in royalties," says Pacific Crest Securities analyst Andy Hargreaves. "I don't understand how the math changes for the better with more subscribers."

Those problems, which seem like they could take years to undo legally, may be one of the reasons that Apple is staying out of the subscription game (for now, at least). But with telecom giants like Nokia, AT&T and Verizon all sniffing around the idea of offering more music through their phones (AT&T and Verizon are partnered with Napster and Rhapsody, respectively), it's possible that the record labels might be willing to develop some modified royalty scheme to keep the subscription model afloat.