MTV, RealNetworks to rework Rhapsody JV: filing

NEW YORK– U.S. digital media company RealNetworks Inc 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 on Thursday.

The partners are considering whether to reduce RealNetworks' 51 percent stake in Rhapsody, resulting in both parties owning 50 percent or slightly less of the digital music service.

According to the filing, the negotiations are focused on restructuring both parties economic rights in the joint venture 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 to much acclaim and was seen as rival to Apple Inc's iTunes in online music retail. Rhapsody was one of the early services to offer all-you-can-eat music packages for a monthly subscription fee.

MTV, which is owned by Viacom Inc, contributed $230 million of advertising on its cable television networks as part of its investment in Rhapsody.

But Rhapsody's impact, even with the backing of MTV, has been relatively minimal on the music space, which has been dominated in the last year by an array of free music social networking streaming services such as News Corp's MySpace Music; CBS Corp's LastFM, iMeem and most recently European start-up Spotify, which is expected to launch in United States next year.

Apple's iTunes is still by far the leading paid-for online music service, with more than 70 percent of the U.S. market.

RealNetworks launched an application in September allowing iPhone and iPod Touch users to access Rhapsody, and the company is now working with Google Inc on a Web music search project.