Joint Venture Could Sink iTunes Ship

Viacom’s MTV Networks and digital media company, RealNetworks, have joined forces to launch a digital music service in the US that will take on Apple’s as-yet-unrivalled iTunes service, replacing MTV and Microsoft’s Urge and RealNetworks’ Rhapsody subscription service, which have so far failed to cause a significant dent in Apple’s revenue.According to figures from US-based market research firm, NPD, both Urge and Rhapsody have struggled to claim their stake in the limited market share left from iTunes’ 68 per cent-ownership of the legal music download market from November 2006 to January this year.

The new service, dubbed Rhapsody, will be headed-up by current Urge director, Michael Bloom. Though the Urge brand, co-owned by Microsoft, will be killed off, MTVN Music/Logo/Films Group president, Van Toffler, believes the forthcoming joint venture will allow RealNetworks and Verizon to better fight iTunes.

“We believe it will be the best of both services,” said Toffler in a conference call with US media yesterday.

“The collaboration of these three companies is like a perfect storm.”

US-based users will be able to access the new service via computers, music players and mobile phones compatible with Verizon Wireless’s Vcast multimedia service.

Finer details of Rhapsody will be revealed in September when MTV begins to heavily market the product, providing music playlists and other programming, according to Associated Press.

“Really, we saw a really great op – a one plus one plus one equals way more than three opportunity,” said RealNetworks US-based chairman and CEO, Rob Glaser, during the conference call.

According to reports, RealNetworks owns the majority of the new venture, while MTV’s stake is “substantial”; it has been rumoured that the music giant will supply US$230 million (AU$287 million) of funding.

This announcement raises further questions regarding the possibility of a new music download service in Australia, including the launch date of Microsoft’s previously-announced service in partnership with Sanity – Sanity Live! – which was meant to be made available simultaneously with Microsoft’s Vista operating system in January, before being pushed back to April, with no results seen still.

RealNetworks Australia could not confirm today that they will launch a music download service in Australia along the lines of Rhapsody America.