Also-ran multimedia company Real Networks (RNWK) and Viacom (VIA) are going to take another run at Apple (AAPL) iTunes. They have a music download service call Rhapsody. One of the reasons it has done poorly is that songs bought through Rhapsody would not play on the iPod. Depending on who is measuring, the iTunes service has 70% to 85% of the multimedia download market now. Rhapsody subscriber have not been able to play songs on iPods but the new program will change that.
According to Reuters, "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." Verizon has not had much success selling music on its phones and the Yahoo! music store has not been a hit. The new alliance as all the look and feel of losers trying to become winners by banding together.
ITunes is successful because it was married with a hardware device, the iPod, from the day it launched over five years ago. This "installed base" of over 150 million multimedia players gives it a position that is unlikely to be challenged.
Real Networks and Viacom should save their money.
Douglas A. McIntyre
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