The two companies team up on a new digital music service set to launch next year.

December 13, 2005

MTV and Microsoft said Tuesday that they’re teaming up on Urge, a digital music service scheduled to launch in 2006.

The collaboration extends to the design and development of the service, which will be available through the Microsoft Windows Media Player software.

This isn’t the only music service in which Microsoft has a tie-in. As part of its recent settlement with RealNetworks, the Redmond software giant has to promote Rhapsody’s subscription music service on MSN (see: Microsoft and Real Reach Pact).

This time, the companies are hoping to harness the power of MTV’s brand name. They plan to promote Urge through the MTV, VH1, and CMT channels and sites.

“This is an impressive entry by one of the biggest names in music in general,” said Michael Gartenberg, research director at JupiterResearch.

iPod Obstacle

As far as subscription-type services go, he added, the Urge service would probably have a lot of consumer appeal. But he predicted it would run into the same problem that other digital music companies are grappling with—the iPod.

“It lacks support for the most popular device, which is the iPod—the same issue that plagues other digital music services,” said Mr. Gartenberg.

The iPod isn’t compatible with any music service, other than the one Apple Computer owns—iTunes. Apple has no plans of opening it up either. The challenge for Urge is it has to reach out to the same demographic—young adults—who love the iPod.

But it’s a challenge that can be met. Other digital companies are trying to create services that could allow Apple users to play songs over the web—without downloading them onto their devices (see: A Web-based Rhapsody in Tests).

“They need to evangelize to consumers that the subscription model is complementary to the way they’re buying music already and is not going to replace existing buying habits,” said Mr. Gartenberg. “They need to focus on value-add with things like editorial.”

MTV has in its favor a history as a market leader in the music business. That could give it an edge over other competitive services.

But to succeed over the long term, the duo will have to come up with a new music device that can give the iPod a run for its money. After all, pointed out Mr. Gartenberg, it’s iPod that has driven the success of iTunes, not the other way around.