MTV, RealNetworks to Form Online Music Venture By ETHAN SMITH and NICK WINGFIELD August 20, 2007 8:32 p.m.
In a bid to create a stronger competitor to Apple Inc.'s marketing-dominating iTunes Store, Viacom Inc.'s MTV Networks is set to announce Tuesday that it is merging its online digital music offerings into a joint venture with RealNetworks Inc., the company behind the Rhapsody subscription digital music service, according to people familiar with the matter.....
Anyone starting to see a trend emerging here? RNWK is deftly gathering up all of the music content and revenue that AAPL cannot and will not be able to lock up.
The big players (labels like Universal + content owners like MTV and Rolling Stone) are afraid of AAPL and the perceived power of Itunes, which will ultimately be Itunes achilles heal. AAPL does not own the content and never will, which means that there is room for flexible, mid-size players like RNWK to become more significant in the digital music and media market.
Recall Universal announcement ten days ago:
Universal, the world's largest music label, said Friday that it will test a program for selling music without digital-rights management, or DRM, software over the next six months.
RealNetworks award-winning Rhapsody� digital music service will begin offering for sale thousands of DRM-free albums and tracks from artists on Universal Music Group as part of a six-month test with UMG, the world's leading music company.
Universal's test will not include AAPL's popular iTunes store, which is far and away the largest seller of music online.
The label would not comment on its exclusion of iTunes. The move may have been part of a larger dispute between the two companies that came up earlier this year, when Universal decided not to renew a contract with iTunes that would guarantee the availability of its entire catalogue of songs at the online store.
Alan Davis of D.A. Davidson, who has a buy rating on RealNetworks, wrote in a note to clients Friday that the company will benefit from Universal's push for a more competitive distribution market.
"Although it is just a six-month test at this point, this is a nice win for RealNetworks -- a stock we continue to believe has been severely oversold," Davis said. End of Story