May 15, 2006 6:35 pm

MTV to launch challenge to Apple’s iTunes

MTV, the US cable television music channel owned by Viacom, will launch a digital music download service on Wednesday designed to compete with Apple Computer?s highly popular iTunes service.

The service, called ‘Urge’, will use Microsoft?s latest Media Player technology and represents perhaps the most serious challenge to Apple?s dominance of the legal digital music download market to date.

Microsoft and MTV executives said the new service will target the growing market of owners of non-iPod digital music players.

While other rival music download services have had limited success, none has had the marketing muscle of MTV behind it or been as tightly integrated with Microsoft’s technology - the latest version of Windows Media Player software will launch along with Urge this week.

Users will be able to download individual music tracks for 99 cents each - the same price as iTunes - or sign up for an unlimited subscription service that will cost $9.95 a month or $14.95 if subscribers want to load the music onto a portable player. iTunes does not offer a subscription service.

At launch, Urge will have more than 2m music tracks from 110,000 artists, 500 playlists, 130 streaming radio stations and more than 20 specialist blogs written by music experts.

Van Toffler, president of MTV Networks, said the company had been working on the new service with Microsoft for months and noted that digital downloads still represent a small fraction of overall music sales. “Only 5 percent of music is sold digitally,” Mr Toffler said, “we are just getting going.”

“We will concentrate on people who don’t have iPods,” Mr Toffler said. MTV is pitching the service at its primary youth audience and has designed it to provide what Mr Toffler describes as “a complete (music) ecosystem”.

Nevertheless, MTV and Microsoft face a formidable challenge. iTunes, with a catalog of 3m music tracks, has sold more than 1bn songs since it launched three years ago and more than 50m iPods have been purchased since 2001.

Excluding the illegal “P2P” (peer to peer) download services, Apple has managed to dominate the digital music market in part because the of the success of the iconic iPod. According to NPD, a market research firm, iTunes accounted for 68 per cent of legally downloaded music files between November and January. Napster, the second largest download service with over 500,000 subscribers, accounted for just 4.4 per cent.

Apple has steadfastly refused to licence its proprietary iPod and iTunes technology to rivals. As a result, although a number of other companies including Napster, RealNetworks, and Yahoo! have launched rival services, none has managed to seriously dent iTunes sales.

Similarly, rival digital music player makers including iRiver and Creative Technology, which have licenced Microsoft’s “Plays-for-Sure” technology, have struggled to compete. But some analysts suggest that at least outside the US, where non-iPod rivals have a substantially larger market share than Apple, there are signs that the relatively expensive iPod may be losing its allure.

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