MTV, Microsoft Set to Take on Apple’s iTunes

December 19, 2005 0

MTV Networks Inc. has partnered with Microsoft Corp. to develop an online music service to be launched early next year to rival the dominance of Apple’s iTunes.

The service dubbed as URGE, it will be integrated into the next version of the software maker’s Windows Media Player and offer more than 2 million tracks for sale individually or as part of a subscription package, MTV said. It will also include downloads of MTV shows, original programming, and online radio programs.

Additional details on the service will be discussed in January at the International Consumer Electronics Show in Las Vegas.

Music Mavens
In leaping into the online-music space, Microsoft and MTV will go head to head with Apple’s popular iTunes service, which should make for a lively battle for market share.

Although iTunes is very popular among consumers, Microsoft will have several advantages as a result of the deal with MTV. Mainly, its technology already is on the majority computers, and when the Windows Media Player arrives in its next iteration, the inclusion of Urge means users will not have to download additional software.

Also, MTV will give the service significant exposure through its television properties. Urge is due to be promoted on the MTV, VH1, and CMT channels, which on average collectively reach more than 165 million viewers.

Microsoft will build the technology behind Urge and MTV Networks will own and operate it.

The current version of Microsoft’s Media Player has built-in links to several music services, including MusicNow and Napster. Microsoft also sells song downloads on its MSN Music website. A few months ago, Microsoft broke off talks with the record labels to license music for a new online subscription service of its own.

In creating a service that won’t work with iPod, Microsoft is both challenging the dominant downloading technology and seeking to create interest in non-iPod music players, which it hopes will be an even bigger market.

IPod represents about 75 per cent of the digital player market, and about 80 per cent of downloaded music passes through Apple’s iTunes, according to Phil Leigh, a digital music analyst with Inside Digital Media.

MTV Networks increased its online offerings in the past year, including launching broadband services and acquiring online video portal IFilm.

Still to Play
Although there have been several high-profile digital-music partnerships like that seen with MTV and Microsoft, and continued fascination over the iPod’s success, digital music still is a small part of the total music market, analysts have noted.

Even with strong interest from recording labels and technology firms, much of the digital-music market is being led by ring-tone revenue, which is sizable. The ring-tone market will continue to grow at an unbelievable rate, said IDC analyst Lewis Ward. That will attract more and more consumers, and drive innovation in that area.

It is likely that the popularity of customized ring-tones could draw more consumers to music services as well, Ward added.

MTV executives have acknowledged that the market is not as robust as it could be, but noted that they are confident it will grow quickly, and that MTV is entering the market now to get in on the ground floor.

MTV Networks declined to give details on pricing, but users can expect to pay on different tiers for a la carte downloads, subscriptions, and for moving rented tracks to a portable music player, the company said.

URGE will not be compatible with Macintosh computers or iPods.