Do joint ventures ever work?
- Posted on [August 22, 2007 ] @ 8:59 pm
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The MTV, RealNetworks, Verizon announcement this week is fascinating, especially if it can truly deliver. The problem, however, is the joint ventures of this type rarely work well.
A couple of points that seem problematic:
*MTV is chipping in $230 million for a 49% stake, but is also requiring the new company, dubbed Rhapsody America, to spend $230 million over 5 years in advertising on MTV’s networks. It sounds as if the investment is risk-free, since MTV will recoup their investment in ad revenue.
*The partnership with Verizon to deliver music over V Cast Music is an exclusive deal, which means the service won’t be available over Cingular, T-Mobile, or any other cellular networks. Aside from the fact it limits the usage to Verizon subscribers, the V Cast service on Verizon is awful and is one of the reasons I decided to switch to Cingular (for the iphone of course).
For something of this magnitude to succeed, I would like to have seen Rhapsody negotiate non-exclusive deals with the wireless carriers and provide them with a rev share for each of their subscribers that use the service in exchange for no restrictions in how the users interact with the service. I suppose the Apple/Cingular relationship made that almost impossible, for now at least…