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LOS ANGELES--Apple's upgraded iPhone didn't inspire fear in at least two of the biggest subscription music sites--even before they learned that the device wouldn't let people download music via the new 3G network.

"I'm not trembling," Anu Kirk, Rhapsody's director of product management, said Monday at the iHollywood conference. "I'm sure they are going to sell a lot of second-generation iPhones. It's a fantastic product but they can't take over the United States with just one carrier."

Kirk was speaking on a panel discussing the mobile music category and specifically about cell phones as music players. The discussion took place as Apple CEO Steve Jobs was introducing the new iPhone 3G at the Worldwide Developers Conference in San Francisco.

Kirk doesn't think the iPhone 3G can duplicate iPod's success, at least not with just AT&T as the phone's only carrier. Any debate about the iPhone's dominance over music apparently has to wait.

The mobile version of the iTunes music store will remain accessible only over the phone's Wi-Fi connection, according to CNET's Donald Bell, who wrote cited Apple's iPhone 3G product page. Bell wrote that "it does seem like Apple has missed an obvious opportunity to allow users more ways to purchase music."

Rhapsody and Napster already enable many iPhone competitors to download music over 3G. This had to come as welcome news to those companies as rumors swirl in the music industry that Apple is considering whether to launch a subscription service.

In March, the Financial Times reported that Apple is considering an all-you-can-eat plan in which users would receive free access to iTunes "in exchange for paying a premium for its iPod and iPhone devices. Sources told CNET News.com that the music labels would agree if Apple shared revenue on device sales. So far, nothing has come of it.

And nothing will--or at least that's what Kirk thinks anyway. His suspicion is that Apple won't enter the subscription business because it conflicts with the company's prime goal of selling hardware.

"Apple's model is to get you to buy a bigger device every 18 months or two years," Kirk said. "You fill up your iPod, you go, 'Oh, I'm going to buy the new iPod with twice as much memory.' In a subscription world, the size of your device matters a lot less cause you can swap out the content. In a world like that the consumer has a lot less incentive to buy a bigger device."

Subscriptions aside, is Apple choosing to ignore cell phones as music players at this point? It wouldn't be missing out on much.

The U.S. consumer has largely ignored their phones as music machines. Kirk noted that the sector is hobbled by the lack of memory in most phones to store music and the high costs. These often include paying for cell phone and data-service plans on top of the music.

Not what you would call a good deal.

An extended outage at RealNetworks' Rhapsody music service has locked out an unknown number of users for the second time since March.

While the earlier problem prevented some customers from accessing the site for up to two weeks, this time executives don't know when the problem will be corrected. A handful of Rhapsody users complained on the company's message boards this week that they haven't been able to log on since Friday.

"It's a known issue," said Justine Navaja, a company spokesperson. "We don't know yet when it will be fixed, but it's only affecting a small group of users. We're doing what we can to make sure it gets fixed as soon as possible."

RealNetworks, which competes with Yahoo Music, Napster, and other subscription services, isn't saying whether the glitches are related or what caused them.

Meanwhile, Josh Solera, a Rhapsody customer from Boston, worries that unless the company corrects the problem soon, he'll be cut off from his music.

Songs downloaded off of sites like Rhapsody and Yahoo Music, are restricted by digital rights management. Licenses in the song files must be updated and that can only happen if customers are allowed to sync their computers to the service's Web site. If they can't sync within a specified time, then their music automatically locks up.

Solera, a management consultant, joined Rhapsody in October 2006 and downloads all the songs he wants for a monthly fee. On Tuesday, he tried numerous times to log on but only received error messages.

To make amends, Rhapsody issued Solera a two-week subscription credit. That may not be enough to make him happy. He said that a series of less dramatic but annoying technical issues have worn on his patience. He likes his Zen music player but the problems at Rhapsody have almost convinced him to swap it for an iPod.

"If I could get a subscription service from iTunes, I would sign up in a minute," Solera said. "I think a lot of people would."

(Credit: CNET Networks)

A few weeks ago, TiVo announced that the subscription music service Rhapsody is now available on Series2, Series3, and TiVo HD boxes. As a Rhapsody subscriber and owner of a TiVo Series2 box, this was pretty exciting. For me, being able to browse Rhapsody's entire music library (million of tracks) from my living room is, in many ways, more exciting than being able to access purchased songs from iTunes, which is one of the main features of the much-hyped Apple TV. (Sonos already offers full Rhapsody access, but it's much more expensive.) I've lived with Rhapsody on TiVo for a few days now, so here are my initial impressions.

As you might expect with TiVo, the user interface certainly looks appropriately slick. From the main menu, you can search, browse the Rhapsody music guide, browse your own library of songs, listen to Internet-radio-like Rhapsody channels, or see what Rhapsody recommends based on your preferences.

(Credit: CNET Networks)

I jumped right into my favorite part of the Rhapsody experience: searching for new music. The search interface is as good as you can expect, with an onscreen keyboard on the left side and a column on the right that suggests artists based on what you've typed in already--it's actually very similar to Apple TV. While I would love the ability to use a wireless keyboard, using the remote isn't too bad--it took me about 15 seconds to get some music by Charles Mingus playing, starting from the search screen. While that's not fast enough to handle someone on a browsing frenzy (which I'm prone to do on my PC), it's a perfectly acceptable sit-on-the-couch experience.

(Credit: CNET Networks)

Browsing your own library seems like a good idea, but heavy Rhapsody users will want to skip it completely. The user interface only allows you to view three albums at a time, so if you have a healthy library--like I do--you'll spend all day trying to find what you want. You can switch to browse by artist names, but then you can only choose from alphabetized track names instead of albums, and again, you can only view three artists at a time.

Once you're playing your music, Rhapsody on TiVo has some additional graphical pizzazz to offer up. Once you stop pressing remote buttons for about a minute, the screen changes to a "Now Playing" mode, which offers of a large album art image and artist, album and track name information. After a little while longer, it goes into a screensaver mode that shows you album art from your Rhapsody library. The look is nice, but Apple TV offers a whole lot more in the eye candy department.

(Credit: CNET Networks)

Another major disappointment Rhapsody fans might have is the lack of editorial content. Part of the fun of searching for new music on Rhapsody is the well-integrated album reviews, which give you some guidance as to whether you should give an album a listen or not. If you know what you're looking for there's no loss, but browsers will miss the info.

The most frustrating issue we ran into was instability. After playing with it for a few days, I've seen the program crash, hang, and get stuck in a mode where it wouldn't actually load any music. Most times I could just exit out of the program and go back in, but I actually had to restart my TiVo to fix the problem with it loading music--and then it still cropped up again. The errors were frequent enough to be pretty frustrating, especially since part of the TiVo experience is supposed to be never running into glitches. On the upside, posts on the Tivo Community and Rhapsody message boards seem to indicate both companies are aware of the issues. (The next imminent TiVo upgrade--version 9.2--is said to fix many of these problems.)

Finally, the fact that both TiVo and Rhapsody require monthly fees is going to turn a lot of people off. TiVo carries a $17 monthy fee, although if you prepay for three years you can bring that all the way down to $8.31 per month. Rhapsody costs $13 to use the software on your PC, or $15 if you want to transfer music to a compatible MP3 player. That might seem like a lot, but if you fully take advantage of the Rhapsody service it makes a lot more sense--I can now listen to Rhapsody on three separate PCs, two portable music players, my TiVo, and even use the Web interface in a pinch.

Despite all these gripes, Rhapsody on TiVo shows a lot lot of promise. When it was working smoothly, it was great to extend the Rhapsody experience to my living room and the service certainly has the TiVo "touch." While Apple TV is great for bringing your purchased iTunes music collection to your home theater, Rhapsody on TiVo effectively brings millions of songs to your home theater. I'm definitely not ready to give it my full recommendation--it's much too glitchy in its current state--but if TiVo and Rhapsody can smooth the kinks out, they might have a killer service on their hands.

Rhapsody's subscription music service is now available on TiVo's DVRs.

(Credit: TiVo)

Add Rhapsody to TiVo's bag of broadband media tricks. Real Networks' music subscription service is available as of today to users of TiVo's standalone Series2 and Series3 DVRs. The integration makes good on an announcement by the two companies back at January's Consumer Electronics Show. Rhapsody joins a host of other broadband offerings on TiVo's DVRs, including Amazon Unbox videos, Live 365 streaming radio, podcast downloads, Yahoo photos/traffic/weather, and customized TiVoCast video downloads. (Note: CNET is a content provider for TiVoCast.)

Existing Rhapsody subscribers should have no trouble getting access to their music collection, which can include anything from customized streaming Internet radio stations to personalized playlists drawn from the millions of tracks available on Rhapsody's service. The service costs $13 a month--above and beyond TiVo's monthly fee--but it can also be accessed on other devices, such as any networked PC, the Sonos Digital Music System, or the Logitech Squeezebox. Upgrade to the Rhapsody To Go plan (an additional $2 per month), and you can transfer songs--from a PC, not the TiVo--to compatible portable players such as the SanDisk Sansa e200R series for listening outside the home.

While the availability of Rhapsody is another nice arrow in TiVo's media quiver, in and of itself, it's probably not the sort of make-or-break feature that's going to boost sales of the DVR. On the other hand, existing and prospective Series3 and TiVo HD owners will be happy to know that TiVo has confirmed that the Multi-Room Viewing (transfer recorded shows to other TiVo DVRs in the home) and TiVo To Go (transfer recorded shows to networked PCs and portable media devices) features are scheduled to be added to those high-def models next month. To date, both features have been limited to standard-def Series2 models only.

A final note for TiVo owners: The Rhapsody service is available on the DVR for a 30-day free trial, so you can try before you subscribe. In order to gain access to the Rhapsody function, you'll need the latest 9.1 software update. If you don't already have it, head over to TiVo's Web site to prioritize the upgrade.

Read the press release.

MTV, Real, and Verizon Wireless have 'formed Voltron' in an effort to take on the iTunes behemoth.

(Credit: TV Tokyo)

With their new joint digital music initiative, MTV Networks, RealNetworks and Verizon Wireless are taking a direct aim at Apple's iTunes powerhouse.

Called Rhapsody America, the yet-to-launch collaboration among the three companies will combine MTV's relatively unsuccessful Urge music store, the Real-owned Rhapsody subscription download service, and Verizon's V Cast mobile media service to create a music store that reaches across the PC, digital music player, and mobile phone platforms.

The new Rhapsody America company is officially a joint venture between MTV Networks and Real Networks, with Verizon Wireless as its exclusive mobile partner. Urge as a brand will cease to exist, with Rhapsody becoming the service of choice for MTV Networks' MTV, VH1, and CMT music brands. Michael Bloom, general manager of MTV's Urge, has been appointed head of the new company, and the company's offices will be located in New York, San Francisco and Seattle.

Urge had been launched as a music store in conjunction with MTV Networks' music brands, but its highly publicized deal with Microsoft had fallen by the wayside as the software company launched its Zune music player and accompanying music store.

Executives from MTV, Real, and Verizon held a joint conference call on Tuesday morning, filled with talk of "alliances" and "joining forces" that evoked superhero Captain Planet or Voltron. "The collaboration of these three companies is like a perfect storm," said Van Toffler, president of MTV Networks' Music/Logo/Films group, who added that they're striving to make Rhapsody America "the best service out there, hands-down."

"The notion of combining with these two marketing behemoths is very, very exciting from our standpoint," said Rob Glaser, chairman and CEO of RealNetworks. "This is a relationship that we spent a long time putting together." RealNetworks, which holds the larger stake in Rhapsody America, has been trying to expand its footprint in the music sales world for some time now through high-profile partnerships.

Few details about the revamped Rhapsody were actually disclosed--pricing, for example, or details regarding finances--but the executives hinted that Rhapsody tie-ins will start to appear as part of the MTV Video Music Awards, which will be broadcast from Las Vegas on September 9.

The executives from all three companies talked up the Verizon deal as crucial to the nature of Rhapsody America. "Our audiences have made it crystal clear that they really want their music accessible wherever they might be," Toffler said. Glaser added that over-the-air downloads through V Cast epitomize Real's goal of a "jukebox in the sky," which he said has been the company's aim since it launched the first RealPlayer in 1995.

More importantly, it's a potential arsenal in the fight to catch up with Apple's iTunes store, the inarguable leader in the digital music sales industry: iTunes offers no mobile download capabilities. John Stratton, Verizon's executive vice president and chief marketing officer, reminded those listening to the conference call that V Cast mobile phones now support 4GB of storage and will support eight by the end of the year--an underhanded nod to the storage capacity of Apple's own iPhone.

The formation of Rhapsody America is the latest move in a music industry trend to prime new strategies for an assault on iTunes. Most recently, Universal Music Group announced that it would not be renewing its contract with Apple's music store and that it would be making portions of its catalog available without digital rights management protection to a number of non-iTunes outlets, one of which is Rhapsody.

Viacom's MTV has plans to align its digital music strategy with RealNetworks, a move that likely marks the end of a similar partnership between MTV and Microsoft, according to a story in the Wall Street Journal.

A year ago, analysts loved the idea that Microsoft appeared to be challenging Apple's powerhouse music store, iTunes, by joining forces with a music-industry icon in MTV.

But MTV's Urge music service fell flat.

One reason may have been that shortly after Urge launched, Microsoft directed much of its attention toward the Zune music player and a digital download store that would not only compete with iTunes but also Urge.

According to the Journal's story, which cited unnamed sources, MTV has recently stopped devoting resources to Urge.

RealNetworks, the operator of the Rhapsody music service, could use some help. The subscriber-based service has failed to make up much ground on iTunes, which recently announced that it has sold more than 3 billion songs and became the nation's third-largest music retailer ahead of Amazon and Target.

But while MTV is a decades-old and very recognizable brand among music fans, the company has fallen behind when it comes to the Internet. Sites like FaceBook, MySpace, and YouTube have lured millions of young people to their sites, and away from television, while MTV has struggled to find a cohesive Web strategy.