Rhapsody in Chocolate: V CAST Music Gets Upgraded

Verizon Wireless (VZ) is getting its groove on starting today thanks to its alliance with MTV Networks Co. and RealNetworks Inc. (RNWK). Verizon’s V CAST music service is now entwined with Rhapsody’s popular subscription music download service, so subscribers can access it across two screens: the PC and the mobile handset.

While nine devices will initially support the new capabilities, Verizon is also releasing a new version of the LG Chocolate handset by the end of July, which will be optimized for the service with perks like dedicated button-access to Rhapsody, faster transfer speeds between PC and mobile, and seamless set-up. More optimized devices will follow by the end of the year.

MTV's marketing engine will support the launch, with $200 million of marketing dollars pledged over a 5-year period starting last August when the intention to create the joint service was announced. Rhapsody will also soon be streaming from MTV’s Web sites, heightening the awareness further.

The aptly named “V CAST Music with Rhapsody” works like this: Users pay $15 per month for unlimited music. They download an application to their PC, which discovers all the music existent on the hard drive and allows dragging and dropping into the Rhapsody music management UI, which uses Verizon numbers and passwords for authentication. For any protected files, Rhapsody will automatically download unprotected MP3 versions to replace them. Meanwhile, music and play lists can be side loaded to up to three compatible mobile phones or MP3 players, burned to a CD, mixed-and-matched and generally managed.

Music also can be downloaded over the air directly to the handset for $1.99 per track; a simultaneous unprotected version is sent to the PC, solving the issue of having incompatible file formats that make it impossible to move tracks from handset to PC; that was a barrier in the previous version of V CAST.

“Since launching in January of 2006, 90+ percent of purchases have been made over the air,“ said John Harrobin, senior vice president of digital media and marketing for Verizon. “That has validated that people value the spontaneity of the mobile experience. But also knew we had to improve the PC experience---because that's where people want to manage their music...We’re the only ones that offer OTA combined with instant PC access.”

As a third option, users can download songs to the PC on a non-subscription, a la carte basis, for 99 cents each.

In a press conference, Harrobin said that at the center of the partnership is a desire to allow users to access music wherever, however and on whichever device they choose.

“That’s we’re pursuing a DRM-free MP3 strategy,” said Harrobin in a clear reference to that other popular music service, iTunes; Apple has been taken to task over its refusal to turn away from DRM, or digital rights management, which is a phrase for the encoding technology that governs when and where a song can be played. “We’re breaking down walls of protected and proprietary music gardens,” he added. “What's happened is that we've gone horizontal, as opposed to Microsoft’s strategy with Zune-- they went vertical on the device--and Apple with iTunes. We embrace a range of formats, and we use whatever DRM requirements are on the devices.”

Initial compatible devices include the retrofitted LG Decoy and Dare, the Samsung Juke and the Samsung Glide, among others. An 8-gig memory card will allow users to store close to 2,000 tracks, while a 16-gig card is due by the end of the year. Nonetheless, Harrobin stressed the desirability of choosing the new Chocolate. “This is a good experience on those other devices, but not optimal,” he noted. “The Chocolate 3 will be the ultimate music experience.”

According to M:Metrics, 17.8 million people listened to mobile music in April, an audience that grew by 30 percent since December 2007. As to whether Verizon’s service will be good enough to tackle the hegemony of iTunes/iPod/iPhone juggernaut, the analyst firm said 5.6 million, or 9.7 percent of, Verizon subscribers reported listening to mobile music, a rate that is 23 percent above the market average (7.9 percent). Sideloading is the dominant mode of mobile music consumption, with 13.9 million people reporting they consumed music this way.

1.6 million, or 2.8 percent of, Verizon subscribers reported downloading music in the month, more than double the average of 1.3 percent. In total, 3 million people downloaded music in April.

“Vcast has proven to be a very successful merchandizing platform for mobile music, as a Verizon subscriber is more than two times more likely to download a song on their mobile device than a subscriber chosen at random,” commented Mark Donovan, senior analyst, comScore M:Metrics, in a briefing note. “However, the pricing and discoverability of mobile downloads has been an impediment to widespread adoption of mobile music downloads. By offering a subscription based model, Verizon’s tie-up with Real breaks many of these barriers and will likely spur consumption of mobile music. It’s also great news for Real, who stands to boost usage of Rhapsody by tapping Verizon’s base of mobile music users and adding support for Verizon mobile devices.”

According to comScore, Rhapsody.com had about 5 million visitors in May.

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