MTV, RealNetworks to rework Rhapsody

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Reuters reports RealNetworks is in talks with partner MTV Networks to restructure the ownership of their two-year old Rhapsody America joint venture, according to a regulatory filing. The partners are considering whether to reduce RealNetworks’ 51% stake in Rhapsody, resulting in both parties owning 50% or slightly less of the digital music service.


According to the filing, the negotiations are focused on restructuring both parties economic rights in the JV as well as their relative abilities to exercise control over decision-making. The idea is to “enable Rhapsody to operate more independently of either party.”

The talks were said to still be in preliminary stages.

Rhapsody America launched in the fall of 2007 as one of the early services to offer unlimited music packages for a monthly subscription fee, but Apple’s iTunes is still by far leading the pack, with more than 70% of the U.S. market.

MTV contributed $230 million of advertising on its cable networks as part of its investment. But Rhapsody’s impact has still been relatively minimal on the music space, which has been dominated by free music social networking streaming services such as MySpace Music; LastFM, iMeem and most recently European start-up Spotify, which is expected to launch in the US next year.