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Real and MTV in joint bid to be crushed by iTunes

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After struggling to keep pace with iTunes on their own, MTV and RealNetworks have decided they'd rather struggle as a team.

Today, during a conference call with reporters, the two companies announced plans to merge their online music services - Rhapsody and Urge - forming one big market also-ran under the Rhapsody name. They've also joined forces with Verizon Wireless, whose V Cast Music service will transmogrify into Rhapsody's new mobile arm.

"Today, we're really excited to announce that MTV Networks, RealNetworks, and Verizon Wireless are getting together to announce a new, integrated digital music experience that consumers can access through their PCs, portable music devices, and mobile phones," said Van Toffler, president of MTV Networks’ music & logo group. "The new service combines the musical curating" - yes, that's what he said - "and programming of MTV Networks' critically-acclaimed Urge service with the best of Real's market-leading Rhapsody service."

Of course, "market-leading" is a bit of stretch. Research firm NPD has yet to update its numbers this year, but last it checked, Apple's iTunes controlled 67 per cent of the online music market, and The Reg is quite sure that Jobs and Co. retain an unassailable lead. Toffler is making the distinction between music download services like iTunes and subscription-based services like Rhapsody.

The new Rhapsody service will continue to use a subscription model - where users have access to its entire music catalog for a monthly fee - but as with the current service, users will also have the power to purchase songs outright - iTunes-style.

"Today, in the context of all our services, we do track-purchases," said John Stratton, chief marketing officer of Verizon, referring to Rhapsody, Urge, and V Cast. "So it's safe to say that our philosophy going forward would be to support multiple models of consumer engagement including purchase models." Please forgive his language. He's a marketing person.

Real and MTV will not say when the new service will launch, but in the meantime, Urge users will also have full access to the existing Rhapsody service, and MTV will toss Rhapsody subscribers a few Urge goodies. "We've launched some Urge-specific, sort-of-MTV-Network-brand-specific content for Rhapsody subscribers," said Real spokeswoman Rhonda Scott. "Today, we launched some content related to the upcoming Video Music Awards, and that's just the start of it." Eventually, Urge will shut down entirely.

Sometime before then, MTV and Real will form a new company, Rhapsody America, to oversee their new uber-music service. As Real boss Rob Glaser revealed in a second conference call, Real will own 51 per cent of the venture, with MTV chipping in $230 mil for its 49 per cent.

This joint outfit will then enter an exclusive partnership with Verizon, using V Cast Music as its sole means of delivering music to mobile phones. V CAST Music is an existing service, already available to Verizon mobile customers, but it will likely be re-jiggered so that it taps into the same music catalog as the new Rhapsody service.

"If you think about the assets, the services, that each of these companies bring to the table, what we're looking to do is very smoothly integrate those services, so as to enable you to have access to your music from any point - desktop or mobile device - instantly and intuitively," said marketing genius John Stratton.

Where does all this leave Microsoft? Out in the cold. At the moment, Redmond is still offering quick access to Urge through Windows Media Player 11, the desktop tool that made its debut with Windows Vista earlier this year. But MTV's Toffler was tight-lipped about Redmond's role in MTV's new venture. "We are in discussions with Microsoft now," he said. "And Urge will continue to be on WMP 11 until further notice."

Like the current Rhapsody service, the new Rhapsody will include DRM-free songs from the Universal Music Group, the world's largest record label. First announced earlier this month, a Real-Universal DRM-free "test" kicked in today, letting users download thousands of the label's songs without rights management restrictions. iTunes is already selling DRM-free music from another mega-label, EMI Group, and WalMart has just announced that its online store is offering DRM-free purchases from EMI and Universal.

Real has said that its Universal test will last for six months, so we're guessing that the new Rhapsody will arrive sometime before then. No word on pricing. And no word on whether Real and MTV are embarrassed they couldn't make a go of it on their own.

Bootnote

This just in: WalMart's brand new DRM-free songs can't be downloaded onto a Mac (much like the rest of WalMart's tunes). Some Apple people are rather angry about this, but we'd like to point out that Steve Jobs doesn't exactly play nicely with handheld music players other than the iPod and iPhone. ®

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