RealNetworks yesterday launched its Rhapsody music-streaming application for the iPhone and iPod Touch, after what the company said was a "smooth process" of back-and-forth with Apple.

Apple's approval of Rhapsody marks the first time the company has allowed an on-demand music streaming subscription-based service on its iconic iPhone in the U.S.

The application, which is a free download, lets Rhapsody customers listen to any of the service's 8-million-plus tracks the service offers, call up saved albums and tune into any of Rhapsody's ready-to-go playlists.

Users can stream music to both the iPhone and the iPod Touch via a Wi-Fi connection; iPhone users can also connect via AT&T's EDGE and 3G data networks in the U.S. Only people who subscribe to the $14.99-per-month Rhapsody to Go plan can use the iPhone/iPod Touch application, however. Customers paying $12.99 per month for the Rhapsody Unlimited plan are ineligible.

RealNetworks expects to ship a second edition of the software by the end of the year that will allow users to cache tracks on the iPhone or iPod Touch for later offline playback. Rhapsody to Go already supports that functionality on some Windows Media Player-based devices from vendors such as SanDisk and Philips.

"That's definitely our intent," said RealNetworks' spokesman Ryan Luckin today. "We're also working on audio improvements, and hard at work to bring Rhapsody to other platforms. We'd like to bring the same thing to Android phones, for example," he said, referring to the Google operating system that some handset makers have adopted.

Rhapsody streams 64Kbps-quality tracks to the iPhone and iPod Touch, half the audio quality of the 128Kbps-encoded tracks that the service streams to subscribers on the desktop.

"That's a trade-off," Luckin acknowledged, noting that higher-quality tracks put a greater burden on AT&T's wireless network when iPhone owners aren't within range of a wireless hot spot.

To tempt others to try the service, RealNetworks is offering a seven-day trial that allows full access to Rhapsody's library.

Because of hardware limitations, Rhapsody won't play music in the background while the iPhone or iPod Touch is being used for other tasks, such as browsing or making phone calls. During Computerworld's brief testing, Rhapsody automatically dropped out when an incoming phone call rang, then popped back up after the call was completed.

Although some were expecting Apple to block Rhapsody from the iPhone based on the company's treatment of Google Voice, the process went pretty smoothly, said Luckin. "Apple came back with requests for a few minor tweaks," he said, "but from there it was approved. Apple was very responsive."

From submission to approval was less than a month, Luckin said.

Other developers, however, haven't had as easy a time as RealNetworks. Google's integrated telephone service, Google Voice, for example, remains in limbo. Last month, in a reply to an FCC inquiry launched at the end of July, Apple denied that it had rejected Google Voice and said it was still "pondering" the submission.

Previously, Apple has told developers that it rejected their applications for the iPhone because they duplicated one or more built-in features of the iPhone or the iPod Touch. Both devices link to Apple's iTunes music store to download tracks, and they play tunes synchronized from a user's collection on a Mac or PC. However, Apple does not offer a subscription-based music streaming service.

Rhapsody for the iPhone and iPod can be downloaded directly to the devices, or to a Mac or PC, then pushed to the smartphone or music player at the next sync session.