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MTV, Microsoft to launch online music service

Viacom Inc.'s MTV Networks and Microsoft Corp. on Tuesday said they would join forces to design and develop a new digital music service.
/ Source: The Associated Press

MTV Networks Inc. said Tuesday it has partnered with Microsoft Corp. to develop an online music service to launch early next year.

The service, dubbed URGE, will be integrated into the next version of the software maker's Windows Media Player and offer more than 2 million tracks for sale individually or as part of a subscription package.

The service will also offer music over online radio.

Microsoft will build the technology behind URGE, which Viacom Inc.'s MTV Networks will own and operate. (MSNBC is a Microsoft - NBC joint venture.)

MTV Networks declined to give details on URGE's pricing, but users can expect to pay different tiers for a la carte downloads, subscriptions and for moving rented tracks to a portable music player, said Jason Hirschhorn, the company's chief digital officer.

Similar services typically charge around 99 cents for an individual track and $5 to $15 a month or more for a basic subscription package.

The current version of Microsoft's Media Player has built-in links to several music services, including MusicNow and Napster. A few months ago, Microsoft broke off talks with record labels to license music for a new online subscription service of its own. It did not explain the move.

Microsoft already sells song downloads on its MSN Music Internet site.

Under the terms of MTV Networks' agreement with Microsoft, URGE will stand out from other services, Hirschhorn said.

"We will be the preferred service," he said, declining to elaborate.

URGE will not be compatible with Apple Computer Inc.'s Macintosh computers or its popular iPod digital music player, a challenge the MTV Networks service will have to overcome, said Michael Gartenberg, vice president and research director for Jupiter Research in New York.

"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," Gartenberg said.

IPods represent around 75 percent of the digital player market, and Apple's iTunes Music Store accounts for around 80 percent of the licensed music download market, said Phil Leigh, a digital music analyst with Inside Digital Media.

The MTV brand could help spark interest in non-iPod players, Leigh said.

Hirschhorn said URGE's focus will not be iPod users.

"We think the iPod has done a great job. Our aim is not to switch people from iTunes and the iPod," he said. "We need to concentrate on where there's going to be a bigger market."

Still, the network will have to do a better job than other music services to sell consumers on the upside of subscription services.

"At the end of the day, the iPod drives sales to the iTunes Music Store," Gartenberg said. "It didn't happen the other way around."