The MTV/RealNetworks conference call regarding their new digital music called Rhapsody America was shrouded in mystery and glazed over with positive affirmations. Hosted by Rob Glaser, CEO, RealNetworks (pictured right), Van Toffler, president, MTV Networks' Music, and John Stratton, EVP Verizon, the call played out like a game of dodge-the-important-questions.
When asked what the investment amount of the venture was, we were told to refer to another RealNetworks conference call scheduled for later today. Er… Ok. After tracking down the joint venture 8-K document we learned that MTV is sinking or $230 million into the venture. We also learned that the head of MTV’s failed Urge music service, Michael Bloom, will lead the Rhapsody America venture with offices in New York, Seattle and San Francisco.
Van Toffler, President of MTV Networks Music said, “The new Rhapsody will build on the musical curation of URGE and have the marketing power of MTV, VH1 and CMT behind it…” Urge customers will be allowed to user their existing logins to access the new Rhapsody America service. With such a large investment from MTV, it’s clear the network expects to act as a mere content provider as RealNetworks takes care of the heavy lifting. But considering RealNetworks’ lack of success versus iTunes, the joint venture will need more than sexy content deals and live events to close the gap against the leading retailer of digital music. 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.
