MTV Urge, Rhapsody Merge

By Richard Menta 8/21/07

In attempt to break the dominance of Apple's iTunes music store real network's and MTV announced that they would merge their two music services Rhapsody and URGE. The new service, dubbed Rhapsody America, includes a third partner in the form of Verizon Wireless' V CAST Music, which will provide the mobile platform for the new service. URGE GM Michael Bloom will lead the new company to be based in NY with offices in Seattle and San Francisco.

"By partnering with MTV Networks, home of the most storied brands in music history, and the market's leading wireless company, Verizon Wireless, we'll make Rhapsody the premier digital music service that delivers great music to millions of consumers whenever and wherever they want. " said RealNetworks head Rob Glaser.

The merger appears to make sense as both Rhapsody and URGE individually have shown the most growth out of any other services against iTunes. While that growth is modest for each, together they become a solid - if distant - number two. For MTV the move also helps to balance out URGE's estranged relationship with Microsoft which co-launched the service with MTV. Microsoft since went a different direction with its proprietary Zune strategy.

The paid music download market as a whole is still a modest one with the average iPod user only possessing around 20 purchased tracks for every thousand existing on their portable player. Growth in this market has also slowed, though it continues to climb each quarter. The new service will also sell DRM-free tracks from Universal music in a deal not offered to iTunes. Those tracks will retail to Rhapsody America subscribers for $0.89, a dime less than the DRM-laden Univeral tracks Apple is forced to offer.

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