14 DAY TRIAL // A few days have passed since Microsoft and MTV announced their URGE partnership. All the statements are in, and now the impressions have started forming.
"Despite years of trying, Microsoft's digital music strategy has played second fiddle to Apple. Devices from such partners as Creative Labs and Dell barely register sales next to the iPod. And online music services from Napster and Wal-Mart haven't slowed Apple's iTunes," Jay Greene writes for BusinessWeek.
Apple's iPod Music Store dynamic duo has been dominating the market for a long time now, and they have seen "iPod-killers" come and go like the tide. With the new video content available on the Music store, and the new deals that keep on coming, it is clear that Apple is not going to sit and wallow in their success, but keep on building and innovating. Now two of the biggest names out there have partnered up to bring for a new service... URGE. MTV already has an online music service, in partnership with MusicNet, which has been around since 2004. Microsoft has had numerous partnerships with other companies such as Real, Creative, Dell and many others; and has taken part in many attempts to push Apple aside, such as PlaysForSure.
PlaysForSure is the portable and downloaded media equivalent of Plug and Play in Windows 95... "Overall, the idea is pretty good in theory, in practice less so. During one test I started using the rather excellent Sandisk Sansa e100. The problem was that even though it had the Plays for Sure logo, it wouldn't work with subscription content. A closer look at the Plays for Sure logo indicated this device would work with downloaded content but not subscription content. Oops. No biggie. Problem was with me or as we used to say in technical support PEBKAC (problem exists between keyboard and chair)." Michael Gartenberg writes for Jupiter Research.
So, after obscurity and not-so-successful attempt, just what do Microsoft and MTV hope to accomplish with URGE? Jason Hirschhorn told the Associated Press: "We think the iPod has done a great job. Our aim is not to switch people from iTunes and the iPod. We need to concentrate on where there's going to be a bigger market." Michael Gartenberg, vice president of Jupiter Research isn't certain the plan will work: "The biggest paradox is the people who are most likely interested in an MTV-branded music experience are also probably the demographic that has the highest interest in the iPod," he said. With Apple's iPod representing three out of four portable media players sold, and iTunes Music Store being the place where 80 percent of legitimate downloads take place, just where is this bigger market they speak of?
If URGE is, like Hirschhorn said, not intended to be a iPod-killer, who will it be competing with?
"We are downgrading RealNetworks from Buy to Neutral. Microsoft announced yesterday it plans to launch a music service jointly with Viacom called URGE. URGE will be bundled with the next version of the Windows media player (featured as prominently as RealNetwork's, Napster's and other services), will enable users to download individual tracks, and subscribe to a monthly offering--very much like the one provided by RealNetworks," A. Sasa Zorovic writes for Oppenheimer & Co. Inc.
"MTV indicated to us [that] the underlying technology for the upcoming service is being built by Microsoft. We believe this indicated Microsoft continues to be very interested in providing a service ultimately competitive with Rhapsody and is likely to learn 'best practices' from Rhapsody of its partnership on MSN," Zorovic writes. "We believe this partnership is likely to increase the risk profile of investing in RealNetworks. Though the company benefited from the capital infusion from Microsoft, the partnership benefits seem much more limited after this announcement."
It would seem that the "bigger market" is in fact all the little fish left in the pond. If URGE plans to grow big by eating the little fish one at a time, in order to grain territory and go after the 'Great White' iPod, they certainly have gone about it the right way.