Rhapsody and Urge Merge

Big news. The subscription music consolidation continues with MTV rolling it's over-hyped under-delivering subscription service, Urge, in with Real's Rhapsody service - this follows Napster's acquisition last year of both Virgin Digital and AOL Music Now's subscribers.

Free Article - WSJ.com: "In a bid to create a stronger competitor to Apple Inc.'s market-dominating iTunes Store, Viacom Inc.'s MTV Networks is set to announce today 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."

A couple of more moves are needed until Real has got a realistic shot a making a dent in Apple's marketshare.

1. First, the market needs Napster (or at least their customers) to be acquired by Rhapsody too. Then, the market confusion will start to clear a little (iTunes needs one strong competitor, not a bunch of tiny ones) - then they can easily position A vs. B in their marketing messaging.
2. Offer DRM-free a la carte tracks (which they are going to do) - word is that they will be really high bit-rate (upwards of 256kbps) MP3s. Sell them for $1 each.
   
3. Introduce an ad-supported streaming service - with an upsell tier to ad-free listening.
   
4. Partner with every "music 2.0" site out there and syndicate their free play web player - support *lots* of external communities, not just their own - cut affiliate relationships with them all.
   

Now they have a basic value proposition that the market can understand - "we are just like iTunes but instead of 30-second samples you can listen to the whole song". Songs you buy can be imported into iTunes and sync'd with an iPhone (iPod sync is supported by other players, but if you want to sync your contacts/calendar with your iPhone then currently can only do that with iTunes). You also have a great web-based streaming experience that doesn't require a fat media player client.

Over time they could move towards "package" download tiers (like eMusic where you can download x tracks/month). I would personally like that model, but I actually think they should refrain from offering that as it confuses the marketing message. Once people understand it is "just like iTunes only better", then they can move on and try some new models.

All that being said... there is nothing keeping Apple from doing all this themselves if/when the Rhapsody plan started getting some traction.