MTV Networks Plays in Apple's Orchard

Can a new music-downloading service take a bite out of iTunes' action?
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Ever wonder what Kristen from Laguna Beach is listening to? Would you download a playlist from TV Land's next-big-throwback, Mr. T? MTV Networks hopes so and is betting that such offerings will attract fans of its programming to its newest incarnation: a pay-to-download music service.

On May 17, MTV Networks (MTVN) launches Urge, a music-downloading service in partnership with Microsoft (the service is included in Microsoft's new Windows Media Player 11). The beta test offers 2 million tracks from 110,000 artists, 500 playlists, 20 blogs and 130 radio stations.

Although MTVN arrives somewhat late in the game, to a field dominated by Apple's iTunes, the company is banking on its brand cachet, longstanding relationships with artists and labels and unique design and subscription model to set it apart. But by fielding a service that is incompatible with Apple's portable players, MTVN will have to work to persuade its viewers to toss their iPods.

A branded ecosystem

Although Urge will offer song downloads à la carte for 99¢, like iTunes, it will exist mainly as a subscription service. For $9.95 a month, users get unlimited access to music to play on their computers; $14.95 allows them to put the music on a portable device; and an annual subscription gives users two free months. (MTVN will offer a free two-week trial.)

MTVN Music/Films/Logo Group President Van Toffler sees Urge as not “an à la carte system, but an ecosystem.”

“Think about when cable launched,” he says. “You came to NBC for a show and left NBC to go to another show. MTV and Nick created a safe harbor where you could spend 24 hours. It's the same for a digital music service. We want you to come in there, learn about stuff, go to MTV.com to get more information. It's really all about having them living and spending more time in our ecosystem as opposed to just downloading a song or an album.”

Like other subscription-based music-download services, such as Yahoo! Music, Rhapsody and Napster, Urge will have to fight for limited market share. According to research firm NPD, iTunes accounted for 68% of music files legally downloaded to PCs between November and January. Napster took only 4.4%.

Then there's the iPod issue. Urge works with several portable players, including the iRiver Clix, but it excludes Apple's player at its own peril.

“There's no 17-year-old who wants to go to high school with the wrong music player,” says NPD analyst Russ Crupnick. “There's this cool factor, and Apple has really done an extraordinary job of exploiting that.”

But MTVN executives maintain that Urge isn't intended to be an iTunes rival. After all, music downloading is still a nascent business. Only 3%-5% of some 70 million Internet households buy music from a legal, à la carte download system in any given month, according to NPD. (Two to three times that many people use illegal systems.)

“It's a wide open marketplace,” says Crupnick.

MTVN's advantage

Urge's sleek presentation and MTVN's wealth of exclusive footage may give it an edge. Like iTunes, Urge has celebrity playlists, but other theme compilations draw on very MTVN sensibilities (“Stalker Songs: the kinds of songs restraining orders are made for.”)

Along with an advanced search function, Urge also enlists popular music bloggers to serve as “informers” on various genres.

While Urge offers free, streaming music videos in its beta debut—and may add pay-to-download music videos and episodes of MTVN and others' shows within a year—the company wants Urge to be known as a music service.

“Our audience thinks very loud and tells us how they like and don't like things, how they want to experience video,” says MTVN Chief Digital Officer Jason Hirschhorn. “This is an evolution just like any of our other properties.”

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