A scrappy music channel gives MTV its first serious competition.

By Raymond Fiore
Updated July 30, 2004 at 04:00 AM EDT

Where’s the ‘M’ in empty-vee?” taunted the slogan on thousands of coffee cups handed out near MTV’s NYC offices. What video junkie hasn’t pondered that question — especially after a weekend of ”Real World: San Diego” reruns? But who had the cojones to proclaim it…to MTV’s face? A feisty little cabler called Fuse.

One of the biggest global youth and music brands, the Viacom-owned MTV empire has remained unchallenged (or has swallowed foes like BET and CMT whole) over two decades of pop-culture dominance. When Fuse was launched 14 months ago, few figured it had much of a chance. But the music-video channel has grown steadily, using a snarky, punky attitude to attract a cult of young rabid hard-rock and hip-hop fans with its simple ethos: All music, all the time. (Sound familiar?) And kids aren’t the only ones rejoicing: Labels and artists see Fuse as an alternative avenue of exposure to the tough-to-snag post-”TRL” generation of record buyers.

”Fuse is a little edgier, a little more open-minded,” says Gayle Boulware, manager of the rock act Staind. ”It’s not the same as when MTV started MTV2. Fuse is even more left of center.” Could this digital-cable baby network, which reaches nearly 40 million homes, rattle a brand that rocks more than 88 million U.S. homes, and more than 400 mil worldwide? Not yet. But Fuse is keeping MTV on its toes.

And vice versa. In the past year, the cable giant has exercised exclusivity on videos by the likes of Linkin Park, P.O.D., and Puddle of Mudd, preventing airplay on Fuse for up to six months. Fuse often got around this by snagging bands for in-studio performances. ”I liken us to a 17-year-old — when you tell us not to do something, we figure out a way,” says Fuse president Marc Juris. (MTV’s exec VP Tom Calderone notes, ”We pay the labels for the opportunity to take a handful of exclusive videos a year…. It’s worked out quite well for both parties.”)

Warner Music Group honcho Lyor Cohen thinks Fuse’s niche appeal is its strength: ”They have proven that they know their audience and how to connect to them.” A recent test launch of new Interscope band the Rasmus suggests that the net is having a genuine sales impact: No radio play or video airtime, save for a regular rotation on Fuse, yielded more than 50,000 units sold. ”[That’s impressive] for a band from Finland that hasn’t gotten much action here,” observes the Firm’s Peter Katsis, who manages heavyweight acts Korn and Bizkit. Adds Boulware, ”Without Fuse, a lot of these new bands wouldn’t have a video outlet.” And big-money companies hawking youth-relevant products are significantly boosting Fuse’s ad-sales revenues, according to Laura Caraccioli-Davis, of media-buying firm Starcom Entertainment. ”It gained traction with advertisers by being kind of the anti-MTV,” she says. ”This is a hard target to reach. Until recently, we pretty much had one-stop shopping at the Viacom networks.”

While an on-the-mend music biz enjoys an upswing (sales are up 7.2 percent over last year), the hope is that this budding rivalry strengthens everyone’s business. ”All of these channels will spur everybody to not get lazy,” says Katsis. Case in point: MTV recently launched mtvU, an exclusively college-aimed channel already hitting 750 U.S. campuses.

As for Fuse, its success may lie in its adversary’s past. Says Juris: ”The greatest compliment we can get is when people say, You feel like MTV [from] 20 years ago.”