The Wall Street Journal reports that MTV will announce a partnership with RealNetworks (RNWK) to compete with iTunes. Also to be announced, Verizon (VZ) will offer mobile distribution for the MTV/Real venture. Furthermore, the Journal speculates that MTV will get rid of Urge, the subscription-based music service they developed with Microsoft (MSFT).
[...] Microsoft has been heavily focused on its own Zune service in recent months, to the apparent detriment of Urge, which had few subscribers. MTV itself no longer invested significant resources in Urge after Zune’s debut [...]
Perhaps, but could this leave room for Yahoo to swoop in? I’ll explain in a moment. But first, the back story…
In the end, if that’s what this is, Urge never really had a chance. Microsoft never had much to offer MTV — unless you’re one of three 16 year-olds named Kristen, who are, like, on their way to Starbucks to wirelessly “share” (read: get limited access to) the new Avril Lavigne album on their Zunes. Is it any surprise that MTV stopped investing in Urge? Why throw more money down the Zune hole? That’s why dropping Microsoft makes perfect sense.
Getting rid of the Urge business model (“get music from people who get music”) and its staff, on the other hand, would be throwing the baby out with the bathwater.
Unlike RealNetwork’s subscription-based Rhapsody service, Urge is (was?) focused on hiring some of the top writers in the music biz to compile fresh, genre-specific playlists for subscribers. Urge fancies (fancied?) itself as the new version of the local record store, where the guy behind the counter always knew what to recommend. Rhapsody, meanwhile, relies on content from AMG (allmusic.com) — which ultimately serves as high-quality filler for a lackluster customer experience.
Now, here’s how Yahoo could help them win: Yesterday, Yahoo announced the ability to sample music files with Yahoo! Audio Search. Combine that search functionality with custom content and playlists from the (former?) Urge
team and all of the and Rhapsody /AMG content teams and you’ve got something close to a one-stop-shop, subscription-based iTunes competitor. That would also be enough to make #2 music site Emusic.com sweat. MTV may be the biggest youth market brand, but Yahoo still has the largest audience online. Besides, striking a deal with MTV/Real would be a lot cheaper than buying Facebook!
Regardless of how this shakes out, kudos to MTV for side-stepping Microsoft. This is also great news for Rhapsody, as they go from umbilical cord to power chord.
UPDATE: Reuters reports that Wal-Mart will now sell DRM-free downloads for $0.94 — that’s $0.25 cheaper per song than iTunes.
DOUBLE-UPDATE: MTV, RealNetworks and Verizon Wireless have officially announced Rhapsody America, a multi-channel network that will pool resources from MTV’s Urge, Real’s Rhapsody, and Verizon’s V CAST music service.