Rhapsody to Compete for iPod Marketshare, Embrace iTunes

On Monday, digital music reseller announced that it will launch a $50million marketing campaign against Apple’s iTunes Store by offering songs through its web site and partners, including Yahoo Inc. and Verizon Wireless. The songs will be available in MP3 format, allowing users to play them on iPods and iPhones.

Prior to this decision, Rhapsody, which is jointly owned by Real Networks Inc. and Viacom’s MTV Networks, had focused on a subscription service, allowing unlimited song streaming for $13 to $15 a month as opposed to selling downloads.

Today, Rhapsody Vice President Neil Smith commented that the fact the service has not been compatible with Apple Inc’s top-selling iPod digital player has limited Rhapsody’s reach.

“We’re no longer competing with the iPod,” Smith said. “We’re embracing it.”

Rhapsody will also function as the music store back-end to MTV’s music web sites with its service being available via Verizon’s VCAST music service.

Executive coordinating the effort describe the strategy as “Music Without Limits.” They said it would be backed by a marketing blitz worth up to $50 million in media space over the next year in part by leveraging co-parent MTV’s TV networks and Web sites. The service stands as the most recent music market player to directly take on Apple’s 70% share of U.S. digital music sales and last month, digital music service Napster Inc launched an MP3 store while both Wal-Mart Stores Inc and Amazon.com Inc launched stores in 2007.

[Via Reuters]

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