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MTV and RealNetworks join forces to compete against iTunes

According to statements made by Van Toffler, president of MTV Networks Music, during the press conference, Michael Bloom (head of MTV’s Urge music service) will be in charge of the new company, called Rhapsody America. MTV plans to start its marketing actions to publicize the new service during the MTV Music Awards event that will take place on September 9 in Las Vegas (USA).

According to Toffler, RealNetworks’ Rhapsody subscription service will replace MTV’s Urge brand as an online music service. Verizon’s VCast music service will be the only mobile platform used for the US Rhapsody service.

During the press conference, Rob Glaser (CEO and Managing Director of RealNetworks) indicated that the new company will build on the vision of RealNetworks promoted since the initial launch of its RealPlayer digital music player.

Rhapsody offers access to the entire catalog available for a monthly fee. The subscription model is not as attractive as the one used by iTunes based on the sale of songs, and that is why Rhapsody has not been as successful as iTunes, as Josh Bernoff, vice president of research at Forrester Research, has pointed out. .

According to his statements, “practically all the money goes to iTunes. Today, most people are not very comfortable with the subscription-based model; [dicho modelo] it has an important limitation, and that is that once the subscription ends the music stops working ”.

Bernoff also points out that eMusic, another service based on the subscription model, is more attractive because it is an MP3 file download service that allows users to continue listening to the music they have downloaded even after the download has finished. validity of the subscription.

Rhapsody also offers an additional option to the subscription model and that allows users to buy any song from its library composed of more than 4 million songs, as indicated by Kevin Nakao (vice president of marketing for Rhapsody America). However, the company has not done a good job in publicizing this option, something that will change now that RealNetworks and MTV have joined forces to promote Rhapsody. As with iTunes, Rhapsody songs are priced at $ 0.99 for users who are not subscribers to the service, while the price for subscribers is $ 0.89 per song.

According to Nakao, “One of the things we want to do is use this as an opportunity to show the market the benefits of our unlimited subscription model … but also offer options for those people who want to buy songs and use Rhapsody to manage them.”

Rhapsody’s unlimited subscription service is priced at $ 12.99 per month for users who want to play music from their computers, and $ 14.99 for users using a portable music player.

Until the convergence of Urge and Rhapsody is complete, Urge users can use their login information to connect to Rhapsody, as indicated by Nakao. However, Rhapsody users cannot do the same with Urge. RealNetworks is already making available to its Rhapsody subscribers some of the content on the MTV and VH-1 television networks, previously only available on Urge.

Viacom’s subsidiary MTV Networks is responsible for running Urge, a music download service launched in May 2006 in partnership with Microsoft. Nakao indicates that MTV’s agreement with Microsoft will end later this year, so the relationship between the two companies will also end in relation to that service.

This movement of rupture with Microsoft and alliance with RealNetworks has been logical for MTV because Microsoft launched a competing Urge (Zune Marketplace) coinciding with the launch of its Zune music player last November, as indicated by Susan Kevorkian from IDC.

According to Kevorkian, another aspect of the agreement that is interesting is related to the wireless download of music to wireless devices and that could be available through Verizon’s V Cast service. The Apple iPhone allows music purchased from the iTunes service to be transferred to the device for playback, but music cannot be downloaded directly to the phone from iTunes.

V Cast allows Verizon Wireless subscribers to purchase music from their PCs or wireless devices. However, songs purchased from a mobile device are priced at $ 1.99 because they are also simultaneously downloaded to the V Cast online service managed from a PC, as indicated by Jeff Nelson (Verizon spokesman).

The agreement between Rhapsody America and Verizon potentially allows for the wireless distribution of music to mobile devices on a subscription-based model, something that is not currently available through Verizon’s music service, as Kevorkian notes. However, he acknowledges that the subscription model has not been well received by users used to buying music directly. The ability to offer such users more options on more devices should be a mainstay for the new society. According to Kevorkian, “it’s about increasing choice for consumers.”