August 21, 2007 / 9:15 AM / 12 years ago

MTV, Real and Verizon team up to battle iTunes

NEW YORK (Reuters) - Viacom Inc’s MTV Networks said on Tuesday it struck a digital music partnership with online music service RealNetworks Inc and Verizon to compete against Apple Inc’s iTunes.

Various logos of the different cable channels from the MTV Networks are pictured at the Cable Television Critics Association press tour in Pasadena, California July 13, 2006. Viacom Inc's MTV Networks said on Tuesday it struck a digital music partnership with online music service RealNetworks Inc and Verizon to compete against Apple Inc's iTunes. REUTERS/Fred Prouser

MTV Networks will contribute cash, a five-year note for $230 million and other assets to the joint venture, according to a RealNetworks filing with the U.S. Securities and Exchange Commission.

MTV will merge its digital music store Urge with RealNetworks’ Rhapsody music subscription service in a joint venture called Rhapsody America. Executives declined to say when products associated with the partnership would be launched.

But Verizon Wireless, a venture of Verizon Communications Inc and Vodafone Group Plc, will become the exclusive wireless distributor for the joint venture’s digital content once it is up and running.

“The pieces are such that we think one plus one, plus one equals big — certainly more than three,” RealNetworks Chief Executive Rob Glaser said on a conference call.

The partnership represents another attempt by tech and media companies to snatch market share from Apple, whose combination of iTunes service and iPod digital entertainment devices has been hard to beat.

“It will be highly visible and it has a chance of eking out some market share,” Forrester analyst Josh Bernoff said. “But it will be awfully hard to push out iTunes.”

MTV launched Urge last year with Microsoft Corp. Shortly after Urge was launched, Microsoft launched its digital music player and service Zune.

Van Toffler, president of MTV Networks Music, said on a conference call that they were currently in discussions with Microsoft over their partnership.

The pact with Verizon Wireless could bolster the new venture’s battle against iTunes. Apple drew criticism from mobile operators and consumers when it made AT&T Inc the sole U.S. provider of its iPhone. The iPhone does not currently allow the wireless purchasing of songs from iTunes.

RealNetworks shares rose 45 cents, or 7.7 percent, to $6.30 on Nasdaq. Verizon shares rose 60 cents, or 1.46 percent, to $41.71; Viacom’s class B shares rose 14 cents to $37.70 on the New York Stock Exchange.

(Visit here for more coverage at Reuters MediaFile blog)

Additional reporting by Lilla Zuill and Paul Thomasch

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