“We are downgrading RealNetworks from Buy to Neutral. Microsoft announced yesterday it plans to launch a music service jointly with Viacom called URGE. URGE will be bundled with the next version of the Windows media player (featured as prominently as RealNetwork’s, Napster’s and other services), will enable users to download individual tracks, and subscribe to a monthly offering–very much like the one provided by RealNetworks,” A. Sasa Zorovic writes for Oppenheimer & Co. Inc.
“MTV indicated to us [that] the underlying technology for the upcoming service is being built by Microsoft. We believe this indicated Microsoft continues to be very interested in providing a service ultimately competitive with Rhapsody and is likely to learn ‘best practices’ from Rhapsody of its partnership on MSN,” Zorovic writes. “We believe this partnership is likely to increase the risk profile of investing in RealNetworks. Though the company benefited from the capital infusion from Microsoft, the partnership benefits seem much more limited after this announcement.”
Full report (.pdf) here.
As we stated when Microsoft and MTV announced URGE: “iPod is the key and MTV and Microsoft don’t have it, no matter how much marketing they put behind URGE. Too little, too late, Microsoft. For the health of Real’s Rob Glaser, however, hopefully the defib was charged up and nearby when he heard about this. It sounds like Real’s new partner Microsoft wants to finish them off once and for all.”
RealNetworks’ CEO …buffering… Rob Glaser …buffering… “PlayedForSure.”
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Related MacDailyNews articles:
Microsoft, MTV target Apple’s iTunes Music Store leftovers – December 15, 2005
Microsoft-MTV ‘URGE’ may interest antitrust regulators; Anti-iTunes labels Sony, Warner back ‘URGE’ – December 14, 2005
MTV-Microsoft URGE music service not targeting iPod, iTunes users; Real CEO PlayedForSure? – December 13, 2005
MTV and Microsoft team up for new digital music service ‘URGE’ – December 13, 2005
Microsoft developing Microsoft-branded competitor to Apple iPod? – December 08, 2005
Motley Fool Take: MTV, Wal-Mart will leverage brands to beat Apple iTunes Music Store – May 10, 2004
MTV jumps into Apple iTunes-dominated online music service fray – May 07, 2004
Digital music panel: Apple could become the MTV of the record industry – March 31, 2004