Real and MTV in joint bid to be crushed by iTunes
Microsoft left out in the cold
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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. ®
COMMENTS
A few thoughts
First, Apple provides the DRM free tracks in a larger file format and charges more for them because 1) EMI probably wanted more for the DRM free tracks, and 2) Apple likely had to make the tracks a different size in order to not violate its contracts with the other labels. You see those other contracts would have contained a provision requiring Apple to increase the price on all its tracks if it increased the price on some of its tracks. By increasing the file size, the DMR free songs would be considered a separate product thus allowing Apple to charge more for songs without violating its contract with other labels.
Second, iTunes from it's inception has included user information attached to all of the songs, not just the DRM free ones. Some more tech savvy people then myself have pointed out this is necessary for some iTunes features to work. Whatever the case may be, it is not like Apple has keep this a secret, anybody with iTunes can see the metadata attached to the songs.
Third, I really do not see why Europeans get upset at Apple for prices varying through European iTune's stores. Apple originally said it wanted one European iTune's store. The labels wouldn't allow it, arguing that copyright laws are different in each country, and the contractual obligations to each artist are different in each country. Presumably if a record company has to pay more to the artists in Britain then France, it would want to charge more in Britain. At the end of the day, Apple's choice was not to open any European iTunes stores, or do it the way the labels wanted. Apple may set the retail price, however, labels set the wholesale price. The labels presumably are charging Apple more in certain countries then others, thus requiring Apple to charge different prices if it wants to make a profit in all Countries. Makes sense to me. This is even more the case when different currency is involved.
Choose your bitrate
I've always thought one of the most usable sites was allofmp3 (ignoring the issue of whether they were legal or not) - you could choose the bitrate you wanted your tracks in and paid accordingly (and they were tagged sensibly as well!). So, if iTunes et al could just get down to anywhere near the pricing model that allofmp3 had...
RE re DRM-free?
So what you are saying is it has been ok for Apple to rip people off by selling lower quality recordings? It takes no longer to encode something at the higher bit rate and the file size difference is negligible so you can't use the 'we need extra storage capacity to host them' argument. Should the consumer not expect an excellent quality recording for their money, seeing as it is already not cd quality? Also, why have user specific information embedded in the DRM free tracks? Surely a violation of privacy. If the pricing is so fair, why have the EU launched a legal challenge to Apple, asking them to explain why those in the UK get charged around 18% more than the French or Italians.
to quote a spokesman for the BPI “iTunes set the prices - not the British record industry. It is a bit like asking a farmer to comment on Tesco prices”
and EMI
“We don't set the retail price. Apple does"
And as for the one price suits all model, where did they get that from? Why should I pay the same price for a 20 year old recording as I do for one released this week?
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