MTV Networks, owned by Viacom, runs Urge, a music download service it launched in May 2006 in partnership with Microsoft. Nakao said that MTV's Urge deal with Microsoft was set to expire this year, so the relationship between the two companies for the service will end.
The move to cozy up to Microsoft's competitor RealNetworks was a logical one for MTV since Microsoft launched a competitor to Urge, the Zune Marketplace, in conjunction with the launch of its digital music player Zune last November, said Susan Kevorkian, a program manager at analyst firm IDC.
"This doesn't come as a surprise," she said. "MTV needed to find another platform that was less of a direct competitor."
In turn, MTV's long-time expertise in offering compelling music programming and its strong brand gives RealNetworks' Rhapsody service a much-needed image and marketing boost, Kevorkian said.
Another aspect of the deal that will be important to watch will be over-the-air downloads to wireless handsets that eventually will be available through Verizon's V Cast service, she said. Apple's iPhone allows songs purchased via its iTunes music service to be transferred and played on the iPhone, but songs cannot be downloaded directly to the phone from iTunes, Kevorkian said.
V Cast currently allows Verizon Wireless subscribers to purchase songs either through their PCs or wireless handsets on a per-song basis. However, songs purchased from a handset cost $1.99 a track because they also are simultaneously downloaded to the V Cast online service that is managed via PC, said Jeff Nelson, a Verizon spokesman.
The Rhapsody America/Verizon deal allows for the potential of delivering songs over the air to wireless handsets on a subscription basis, something that is not currently available through Verizon's music service, Kevorkian said. Though she acknowledged that the subscription model has not been well-received by consumers used to purchasing music outright, the ability to provide them with more options on more devices should be a boon for the new venture. "It's about expanding choices for consumers," she said.
This story was updated on August 21, 2007
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