Seattle (WA) - RealNetworks today announced that they have launched Rhapsody 4.0, the latest version of their music subscription and purchasing service. Complementarily, SanDisk has released the first set of MP3 players that are optimized to store and play back music in users’ Rhapsody accounts. Still sort of fresh on the heels of the bevy of iPod and iTunes announcements last month, Rhapsody 4.0’s launch gives the music streaming service a visual overhaul and a couple functionality tweaks.

One of the biggest new additions is Rhapsody Channels, which is essentially a more customizable version of Rhapsody’s music radio service that was offered in previous versions of the software. They’ve also taken a cue from iTunes and added a simplified interface for music transfers to portable players. Rhapsody 4.0 implements the increasingly popular drag-and-drop functionality for this.

One more new feature is Dynamic Playlists, an automatically generated list of songs based on song, artists, and genres that are in a user’s play history. More notably, the new version of Rhapsody also adds support for more MP3 players, according to RealNetworks.

To correspond with the new version of Rhapsody, a new line of SanDisk MP3 players were released today, the Sansa e200R players, which were announced last month.

According to RealNetworks, these devices are the first ones to be specifically based on Rhapsody DNA, which is the technology Rhapsody uses to enable subscription access and music streaming from other hardware and software platforms. They are available with hard drives ranging in from 2GB to 8GB. There’s also a microSD card slot, which allows additional capacity of up to 2GB.

Celebrating their fifth anniversary this year, Rhapsody has over 1.6 million subscribers who have tapped in to either the $9.99 monthly fee for the PC-based software subscription and/or $14.99 for the mobile version.

According to a report last month from Enderle Group’s Rob Enderle, Rhapsody has the best strategic position right now in the sandwich between the cemented iPod and the hyped Microsoft Zune.

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