Hey, you could put an i out with one of those things
Apple has been comfortably camped at the peak of the online music mountain for so long now that it may have tuned out the noise from the climbers struggling below. But the competing expeditions are getting more formidable. Today, MTV, RealNetworks and Verizon announced a joint venture aimed at loosening the grip of the iTunes-iPod-iPhone party.
MTV is taking its Urge digital music store out of an unproductive partnership with Microsoft and merging it with RealNetworks’ Rhapsody subscription service to form a new entity called Rhapsody America. Verizon will be the exclusive mobile carrier through its V CAST system. Urge’s Michael Bloom will head the company, but Real will own 51% and contribute all the software assets. More financial details will be announced later today, but one nugget is that MTV will lend the joint venture $230 million (”presumably,” adds Peter Kafka, “to make up for the fact that the Urge assets are worthless”). Said Van Toffler, President of MTV Networks Music & Logo Group. “The new Rhapsody will build on the musical curation of URGE and have the marketing power of MTV, VH1 and CMT behind it, ensuring this new platform is front and center in the hearts and minds of music lovers.”
So, can Rhapsody America’s combination of retail sales, subscription service and mobile downloads (coming soon), all for multiple devices, pose a challenge to Apple? An uphill battle to be sure, but analysts are chipping in with suggestions. And Adario Strange writes, “The one Apple Achilles heel Rhapsody America is positioned to exploit is iTunes’ lack of mobile phone downloads. Which means the next major announcement from Apple in the next two quarters will probably have something to do with wireless music downloads on the iPhone.”
The joint venture news overshadowed another move by Real likely to eat at Apple. Real said Rhapsody was starting a six-month test selling music free of digital rights management restrictions from the vaults of Universal, which just ended an exclusive relationship with Apple (see “Universal’s risky new lifestyle — playing the field without protection“). The 256 kbps MP3 files will be available for the same price as protected files — 89 cents per song for Rhapsody subscribers and 99 cents for non-subscribers. Apple’s price for the non-DRM tunes it offers from EMI is $1.29 (see “Price of freedom: Eternal vigilance plus a 30% premium“).
As if that weren’t annoying enough for the Cupertino brain trust, it also learned that the iTunes Store would be facing price competition from the biggest of the big boxes, Wal-Mart. The discount chain’s online music store is now offering DRM-free MP3s from EMI and Universal (they’re everywhere!) for 94 cents per track and $9.22 per album. Hundreds of classic albums go for even less (get 50 Cent for $5.88). Turning again to the insightful Peter Kafka: “We still think the appeal of DRM-free songs are overstated — it’s not going to solve the music industry’s problems. But they’re definitely better than the other option — crippled tracks that only work on certain players and certain devices. And they’re definitely a way for Wal-Mart to get Apple customers to switch stores — or at least take a look.” Of course, if they take a hard look, they may not like the fact that Wal-Mart sells only the edited versions of music that comes with a parental advisory.
And finally, Universal (I said they were everywhere) is also making its DRM-free catalog available through a new music service aimed at gift-givers and gift-seekers. Gbox offers both a site and an embeddable widget for blogs or social sites through which one can broadcast a musical wish list. Gbox then enables your generous friends and relatives to buy the tracks for you at 99 cents per.
Apple may still feel above it all, and no one venture may be in a position to threaten it for a while yet. But there’s enough movement down below to start sending tremors.
Wal-Mart couldn’t break Amazon’s dominance, despite repeated attempts. Wal-Mart is a digital paper tiger that has never “gotten it” when it comes to online sales. And fighting iTunes when the players supporting Real/MTV and Wal-Mart’s music mart are crap only means good money is being thrown in after bad. You are not getting it.
This isn’t about just music, or DRM, or the music player–Microsoft, Real, Dell, HP, and on and on have all made the mistake. No, it’s about the package, the marriage between iTunes, the iPod, and the ease at which things just work together. Nobody else has done that. And Wal-Mart’s, MTV’s, and Real’s history shows that they are unlikely to “get it” this time.
I sometimes feel like a record or skipping CD when I write, “It’s the gotta be easy, or else you’re toast!”
“But there’s enough movement down below to start sending tremors.”
Only if you are standing still. Does Apple stand still? Nope
The best thing about all the new services is that it’ll stop the folks at Apple from getting lazy and greedy. It’ll keep them coming up with more features and hopefully keep the prices low.
I would think that Amazon will soon be coming out with a wish list that can be easily incorporated into your favorite social networking site or blog. Watch out gBox!
Wouldn’t you want a wish list that allows you to wish for more than music downloads. Give the gift of music downloads with an iTunes gift card!
I would venture to say that the social networks will want to reap some of the profits of conducting commerce on their site and therefore further erode into gBox’s very thin margins.
The Register had the correct title for this: Real and MTV in joint bid to be crushed by iTunes