MTV, RealNetworks partner to challenge iTunes [updated]

Viacom’s MTV Networks is ready to announce that it is merging its online digital music offerings into a new venture with RealNetworks in an effort to better compete with iTunes, according to a Wall Street Journal report. The new joint venture will reportedly use Verizon Wireless for mobile distribution of content, a move that provides the service additional leverage against Apple and iTunes, following the launch of the AT&T-only iPhone. The report also claims that the venture will be headed by Michael Bloom, who currently heads Urge for MTV Networks.

The new venture effectively signals the end of the Urge service, which was announced in partnership with Microsoft last year.

Update: In an official announcement, Real and MTV revealed that they are uniting Real’s Rhapsody service and MTV’s URGE service in a single offering from a new company, Rhapsody America, that will be the exclusive digital music service for Real and for MTV Networks in the United States. Through the new company both Real and MTV have formed a long-term exclusive relationship with Verizon Wireless.

As part of that relationship, Rhapsody will be fully integrated with Verizon’s VCAST Music service. As of today, users of MTV’s URGE service can use their existing usernames and passwords to log in to Rhapsody and get access to both services.