MTV Networks is expected to launch an online music service powered by MusicNet later this year, making it the latest big brand to enter an increasingly crowded market for online music, people familiar with the plan said Thursday.
Both MTV, a unit of Viacom Inc , and MusicNet, a joint venture of RealNetworks and three labels, Bertelsmann AG's BMG, EMI Group Plc and Warner Music, declined to comment.
MTV has indicated before that it wanted to enter the digital music arena, a market which is gaining momentum with the advent of popular services like Apple Computer Inc's popular iTunes service.
MusicNet is a business-to-business company that charges its clients fees for offering them the technology, the infrastructure and its catalog of licensed music to develop digital music services.
Its customers include Time Warner Inc's America Online and Virgin Group Ltd, which plans to launch an online music service in the U.S. and the United Kingdom by late summer, with other markets to follow.
The Virgin service will use the Windows Media Audio format to compress the music, while other MusicNet customers like MusicNet@AOL use RealNetworks' proprietary audio format to compress music.
It was unclear which format the MTV deal would involve, the people familiar with the discussions said. It was also unclear what the MTV service will cost, although similar services now charge about $1 a song or about $10 a month for unlimited use of streamed music.
MTV hopes to use its brand awareness and clout with young music fans in a strategy similar to that of electronics giant Sony Corp., which this week announced a new online music service called Sony Connect compatible with its mini-disc Walkman devices.
Since its first broadcast in the early 1980s, MTV has been a force to be reckoned with in the music industry. The network is in more than 80 million homes and has popular spinoffs like MTV2.
But analysts say even well-known consumer brands face formidable competition in the digital music field. Rivals include iTunes, RealNetworks' Rhapsody, Roxio Inc's Napster, MusicMatch and Wal-Mart Stores Inc. and MusicNet@AOL.
MusicNet was set up by major labels in 2000 in response to rampant online piracy and in a bid to promote commercial online music services.