MTV bails on Microsoft, partners with RealNetworks for "Rhapsody America"
15 months after partnering with Microsoft on URGE, MTV has decided to cut its ties with Microsoft and cast its lot with with RealNetworks and Verizon. At a news conference this morning, MTV and RealNetworks announced …
Context & Ripple Effects
MTV is walking away from URGE, the digital music store it built with Microsoft just 15 months ago, and folding its brand into Rhapsody America — a joint venture with RealNetworks announced at a morning news conference and detailed in the companies' joint announcement with Verizon Wireless. The move traveled fast: the Wall Street Journal had the venture a day early, and CrunchGear was already needling the announcement's buzzword-heavy framing.
The swap matters because it is a rebuke of the Microsoft-affiliated download store model from one of the biggest consumer brands in music. MTV is trading Microsoft's storefront technology for RealNetworks' subscription service plus a Verizon Wireless distribution channel, betting that bundled access beats standalone downloads.
First-order effects
- URGE customers and label partners are left on a store whose lead backer has been dropped, while RealNetworks gains the MTV audience for Rhapsody without building a brand itself.
Second-order effects
- Verizon Wireless becomes the mobile pipe for an MTV-branded subscription service, pressuring rival carriers to strike their own exclusive digital-music bundles, and leaving Microsoft's PlaysForSure-era partner roster visibly thinner.
Third-order effects
- If big media brands keep abandoning co-built download stores for subscription-plus-carrier packages, the US digital music market consolidates around a few licensed platforms — Rhapsody among them — rather than per-brand storefronts.
The trend: Digital music is consolidating from branded download stores toward licensed subscription platforms bundled with carriers, as MTV's switch from Microsoft to RealNetworks illustrates.