The company said it was adding the service as many of its customers have moved into "a new chapter of their life" and would like to share music with their kids.
Other music and video providers have also targeted the kids market. YouTube, for example, launched a service for kids, but the service has been dogged by controversies over advertising and inappropriate content.
Rhapsody said it had a safe and controlled environment for kids, and has added a parental verification step to make it more difficult for young kids to leave designated areas without supervision. Its playlists are also safe and fun, and designed for kids, it added.
The Rhapsody Kids service is available from Thursday on Android devices at no additional cost with a Rhapsody or Napster subscription, with a version of the service for iOS expected soon. The kids version is rolling out as a free update to over 3 million Napster and Rhapsody premier subscribers worldwide, Rhapsody said.
Rhapsody International, which runs the Rhapsody and Napster services, is facing tough competition from newer entrants in the music streaming market, like Google and Apple.
The company said in July it had reached 3 million subscribers, up by 50 percent from a year earlier.
RealNetworks, which owns 43 percent of Rhapsody, reported in a regulatory filing to the U.S. Securities and Exchange Commission that Rhapsody saw its revenue increase to US$50 million in the quarter ended June 30, up from $42 million in the same quarter last year. But losses increased to $12 million in the quarter from $4.7 million in the same quarter in the previous year.
Parents can access Rhapsody Kids from the app's main menu, and add songs from the Rhapsody catalog. The bookmarks are automatically downloaded for offline playback to help parents save on their data plans and phone batteries, Rhapsody said. Kids can also explore a catalog of kid-friendly music and playlists curated by the company's editorial team.