The Wall Street Journal this morning broke the news that MTV will combine forces with RealNetworks to form a new company that will battle it out against Apple's iTunes.
MTV's Urge music service will combine with RealNetworks' Rhapsody music service. The combined company will be called Rhapsody America, with the Rhapsody music service retaining its original name. RealNetworks will own 51% of the new company, with MTV owning the remaining 49%. Urge's head, Michael Bloom, will run the joint venture.
Also involved is Verizon Wireless (itself is a joint venture between Verizon and Vodafone), which has signed an exclusive relationship with the bunch. The new Rhapsody offering will be replacing Verizon's digital music offering: the VCast Music store. Verizon will also be replacing its existing PC-based service with the new Rhapsody client.
Verizon customers will be able to purchase songs from their PC, as well as over-the-air from the mobile phones. In fact, over-the-air downloads are said to be a very important part of this joint venture. Songs purchased on their phones can be access from the PC. Not relegated to just songs, Rhapsody will also include ringtones, album covers, ringback tones and music videos. Verizon plans to release phones compatible with Rhapsody so you can transfer subscription music to the devices as well.
The key takeaway from this morning's conference call is that there will be a massive marketing push to promote Rhapsody. Under the terms of the deal, MTV will provide $230 million over five years for "hard advertising" purposes, as well as provide "free" promotion in MTV programming and other integrated marketing efforts. It all kicks off with the MTV Music Video Awards on September 9th.
It's my understanding that Urge never really was well marketed by MTV. The whole deal with Urge was that MTV was supposed to supply the big-media awareness behind it, but that fizzled. When asked about that during the call, the response was that "firehose will open" for the first time.
Now if Verizon gets behind the joint venture with some of its own marketing muscle, you may have a serious competitor yet. Verizon is also promising 8gb music phones this year, with storage space to double in 2008. Bring together a proper over-the-air and side-loaded music experience, with some really neat music phones that have some real storage space, plus some serious marketing backing from MTV? You quite possibly have a viable competitor (though, still considered "niche" when compared to Apple's marketshare).
It's time for Sirius and XM to dedicate some serious resources to their mobile offerings. If ever we had a crystal ball to see what was coming, this is it.
I work part-time for Verizon and the new LG Chocolate phones are specifically targetted for this, and to compete with the iPhone. They already support 4 gigs of MicroSD, and I wouldn't be surprised if a flash update of the hardware would allow it to do 8 gigs once thats available, though that is speculation.
Thought I would also mention that I know Microsoft is probably involved in this at some point as well. Whenever you run Windows Media Player 11, it sets the music store for Urge, though more recently it has also allowed Napster. So this could be forming the perfect storm against Apple/iTunes and iPhone/Cingular, with the likes of Microsoft, Real (ugh I hope this deal brings an end to that shitty RealPlayer and consolidates it into WMP11) and MTV/Urge bring some pretty powerful names.
Again this is all speculation on my part, and I have not heard anything from the company itself. But they have needed some way to compete with iTunes and Cingular, and this has enough big names in it to finally rival Apple.
Please....MTV=the king of irrelevence. and steves not worried about your scary windows media player.... the ipod is gonna be here for a very long time. oooh boy watch out for the new MS/MTV/SANSA bug recorder