Under the plan just announced, RealNetworks would own 51% of a new company, Rhapsody America, with the rest belonging to Viacom Inc.'s MTV Networks. RealNetworks is contributing cash, employees, contracts and customers.
MTV would invest cash and provide a $230-million loan over the next five years, and the new venture will buy at least that much advertising on MTV channels including flagship MTV as well as VH1 and country music channel CMT.
MTV also plans to transfer users of its Urge digital service, developed with Microsoft Corp., to the new service.
"By putting these services together, they have a stronger service," said analyst Josh Bernoff of Forrester Research. But he noted that songs through the Rhapsody subscription service don't work on the iPod.
Another sign of Apple's growing importance is the participation of cellular service provider Verizon Wireless in the Rhapsody deal. Executives at the three companies said Rhapsody America customers would be able to listen to their songs on their Verizon phones.
With many new ways to buy digital music emerging this year, confusion will be commonplace, said David Card, online music analyst at Jupiter Research.
But all the confusion will probably lead to the simplest solution, which is music in the unrestricted MP3 format popularized by unauthorized file-trading programs, Card said.
And the more MP3s on the market, the better shape the iPod will be in.
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joseph.menn@latimes.com
michelle.quinn@latimes.com
