Rhapsody to launch iTunes competitor

Section: Software + Apps, Home and Personal, Music, Web, iPod + iTunes, iPod Family, iTunes

Real Networks and Viacom’s Rhapsody will be launching a $50 million MP3 downloads business to challenge iTunes’ 70% market share, Reuters is reporting.

Digital music seller Rhapsody is launching a $50 million marketing assault on Apple’s iTunes, offering songs online and via partners including Yahoo Inc and Verizon Wireless, Rhapsody said on Monday.

The songs will be sold in MP3 format, which means users of the Rhapsody service will be able to play them on iPods.

Before now, Rhapsody, jointly owned by Real Networks, Inc. and Viacom Inc.’s MTV Networks, had focused on a subscription service, allowing unlimited song streaming for $13 to $15 a month, rather than selling downloads.

But Rhapsody Vice President Neil Smith said the fact the service has not been compatible with Apple Inc.’s top-selling iPod digital player has limited Rhapsody’s reach.

“We’re no longer competing with the iPod,” Smith said. “We’re embracing it.”

Rhapsody also will be the music store back-end to MTV’s music Web sites and iLike, one of the most widely used music applications on social networking site Facebook.

Rhapsody is not the first business to try to compete with iTunes’ dominance in online music sales.

Rhapsody is the latest player to challenge iTunes’s 70 percent-plus market share of U.S. digital music sales.

Last month, digital music service Napster Inc launched an MP3 store. Both Wal-Mart Stores, Inc. and Amazon.com, Inc. launched stores last year.

None of the new stores has made much of a dent on Apple’s lead. Early this year, iTunes became the biggest music retailer in the United States. It has sold more than 5 billion songs since it launched in 2003.

Via [MSNBC]

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