MTV, RealNetworks, and Verizon gang up on Apple and the iTMS

execs editOne company couldn’t take down Goliath, now maybe three can.

Viacom’s MTV Networks, RealNetworks, and Verizon Wireless announced today that they are teaming up to bring music lovers everywhere yet another digital music service, Rhapsody America, in an attempt to create a stronger competitor to Apple’s market-dominating iTunes Music Store.

The collaboration of the three companies “is like a perfect storm,” said Van Toffler, president of MTV Networks Music.

mtvMTV will contribute $230 million in cash over five years and bring to Rhapsody America its Urge subscribers. One may recall that Urge was formed 15 months ago as a digital music service venture between MTV and Microsoft. MTV will hold 49 percent of Rhapsody America.

RealNetworks, the ones behind the Rhapsody digital-music service, will also contribute cash, its Rhapsody subscribers, and will retain majority ownership in Rhapsody America with 51 percent.

In a shrewd move to exploit a weakness in the iPod/iTMS platform, Verizon signed on to supply mobile distribution for Rhapsody America’s content through its V-Cast service. Currently iPod and iPhone owners cannot download music directly to their devices from the iTMS — instead, tracks must be “side-loaded” via a computer — something Apple is expected to rectify in the coming months.

verizonVerizon’s involvement could also provide additional leverage against Apple, which angered many mobile carriers and potential customers by deciding to make the iPhone compatible only with AT&T, notes the Wall Street Journal.

It depends on one’s level of cynicism as to whether Rhapsody America is the best attempt to date to take on Apple and the iTMS, or whether its just another play to slay Goliath with a sub-par service. MTV brings with it a brand name, a rich history of music programming, a strong connection to music fans, exceptional youth marketing, and the viewers and fan base of other Viacom/MTV properties, VH1 and CMT.

MTV also brings with it utter failure in delivering digital music, as Valleywag reminds us.

rhapsodyRealNetworks brings with it a well-known Web media platform, the ability to do the heavy technical lifting required for Rhapsody America, and Rhapsody itself. Rhapsody is subscriber based, charging users a monthly fee starting at $12.99 to listen to an unlimited number of songs, where the iTMS is based on an ownership model.

RealNetworks also brings with it mediocre products and services that, to date, have failed to dethrone Apple (and with it Quicktime), iTunes, and the iTMS.

Verizon may be the nation’s most reliable voice and data network, serving more than 62 million customers, but V-Cast hasn’t lit the digital music world on fire. And, if memory serves, didn’t Apple originally offer the iPhone — or at least discussed it — to Verizon, which turned it down, or wasn’t interested?

When one looks at Apple’s digital music strategy, it isn’t just the iPod or iPhone (hardware), or iTunes (software), or the iTunes Music Store that’s responsible for the market-leading success. It’s all of these, as the iPod, iTunes, iTMS (and probably the iPhone) were designed and developed together as an ecosystem. As a result the iPod has sold more than 100 million units and the ITMS reached 3 billion downloads recently.

MTV, RealNetworks, and Verizon will face a variety of non-iPod hardware devices, Windows-based (and Mac?) software, and the user experience will undoubtedly be different between the the different manufacturers. Can Rhapsody America unite them all?

As far as Apple’s other “weaknesses”, they can be overcome. If subscription vs. pay-to-own begins to take root, Apple could add subscriptions to the iTMS and offer both. If downloading music directly to a device becomes important over the next few months, Apple could add the functionality to the iTMS for the iPhone and future iPod devices.

last100 is edited by Steve O'Hear. Aside from founding last100, Steve is co-founder and CEO of Beepl and a freelance journalist who has written for numerous publications, including TechCrunch, The Guardian, ZDNet, ReadWriteWeb and Macworld, and also wrote and directed the Silicon Valley documentary, In Search of the Valley. See his full profile and disclosure of his industry affiliations.

One Response to “MTV, RealNetworks, and Verizon gang up on Apple and the iTMS”

  1. David Mackey says:

    The use of the term “perfect storm” is ironic in light of Skype’s recent usage of the same term in an entirely different sense.

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