Joint venture to battle iTunes

By Kenneth Li

NEW YORK (Reuters) - Viacom's MTV Networks said on Tuesday it struck a digital music partnership with online music service RealNetworks Inc and Verizon to compete against Apple's iTunes.

MTV Networks will contribute cash, a five-year note for $230 million (116 million pounds) and other assets to the joint venture, according to a RealNetworks filing with the U.S. Securities and Exchange Commission.

MTV will merge its digital music store Urge with RealNetworks' Rhapsody music subscription service in a joint venture called Rhapsody America. Executives declined to say when products associated with the partnership would be launched.

But Verizon Wireless, a venture of Verizon Communications and Vodafone Group, will become the exclusive wireless distributor for the joint venture's digital content once it is up and running.

"The pieces are such that we think one plus one, plus one equals big -- certainly more than three," RealNetworks Chief Executive Rob Glaser said on a conference call.

The partnership represents another attempt by tech and media companies to snatch market share from Apple, whose combination of iTunes service and iPod digital entertainment devices has been hard to beat.

"It will be highly visible and it has a chance of eking out some market share," Forrester analyst Josh Bernoff said. "But it will be awfully hard to push out iTunes."

MTV launched Urge last year with Microsoft. Shortly after Urge was launched, Microsoft launched its digital music player and service Zune.