RealNetworks Inc. reported a third-quarter profit today that beat Wall Street expectations and reversed a quarterly loss from a year ago.

The company's music revenue, derived from its Rhapsody music subscription and download services, appeared to partly drive that reversal, jumping 39 percent to $25 million in the quarter.

Real reported a quarterly profit of $11.2 million, or 6 cents a share, for the period ended September 30, reversing a loss of $7 million, or 4 cents, in the same period a year ago. The company said it earned 8 cents per share excluding litigation expenses, beating Wall Street expectations of 4 cents a share, according to a survey by Thomson First Call.

"We continue to make great progress with strong year over year revenue growth, increased profitability and a base of more than 2.2 million paid subscribers, including 1.3 million paid music subscribers," said Rob Glaser, company chairman and CEO, in a statement.

Shares in the company took a dip in after-hours trading, as the company's fourth-quarter forecast Wall Street estimates. The company forecast fourth-quarter earnings to be in a range of $1.42 a share to $1.48 a share, while analysts are expecting $1.48. Shares dropped 36 cents, or nearly 5 percent, to $7.92.

But the company recorded a strong revenue of $82.2 million in the quarter, a 20 percent year-over-year jump and in line with Wall Street expectations.

Paid subscriptions for the company's RealPlayer media player grew, as did subscribers to Rhapsody, although not by as much as it had been growing.

Rhapsody now has more than 1.3 million paid subscribers, up from 1.15 million at the end of the previous quarter.

Music services now represent 30 percent of the company's total revenue, up from 26 percent in the third quarter last year.

The quarter saw the company unveil Rhapsody 25, a free service that allows users who create a Rhapsody account to listen to 25 streaming radio stations and stream 25 full songs per month.

In the wake of Real's landmark settlement agreement earlier this month with Microsoft, Glazer said he expects to begin to integrate Rhapsody 25 with MSN Messenger soon.

"Our goal is to make it as easy as possible for consumers to join the Rhapsody community," he said.

Glazer pointedly mentioned Yahoo!'s decision last week to double the price of its music subscription service Yahoo! Music Unlimited, "thereby effectively undercutting what we believe was their core consumer marketing proposition," Glazer said. "We believe we made the right decision earlier this year to stick to our guns and to not enter into a race to the bottom on price."

Glazer acknowledged that Apple's line of iPod media players far and away dominate the device market, and said he is confident that Apple's decision to prevent interoperability with its proprietary FairPlay DRM copy-protection technology will be its undoing.

"One of the standing lessons of the technology industry is that open beats closed long term," he said. "Our view is that we're running a marathon not just a sprint."

Glazer concluded the call by noting Real's holiday promotion with flash memory and flash-based MP3 player maker SanDisk and electronics retailer Circuit City. The promotion will give anyone who subscribed to the portable Rhapsody To Go service an $80 coupon for any portable audio device from SanDisk at Circuit City.