October 11, 2005 9:37 AM PDT

Real, Microsoft reach truce

Microsoft and RealNetworks announced a sweeping deal on Tuesday that puts aside their legal differences and aims to shore up their respective digital-music strategies.

Under the deal, Microsoft will pay $460 million in cash to RealNetworks to settle antitrust claims. It will also pay $301 million in cash to support Real's music and game efforts, and Microsoft will promote Real's Rhapsody subscription music service on its MSN Web business. Microsoft can earn credits toward that $301 million by signing up subscribers via MSN.

Related audio
Microsoft, Real to work together
Bill Gates and Real CEO Rob Glaser describe the new cooperation between the rivals. (Glaser speaks first.)

"Today, we're closing one chapter and opening a new one in our relationship with Microsoft," RealNetworks CEO Rob Glaser said in a statement. "The legal chapter is being closed with an appropriate and fair outcome that sets the stage for a very productive and collaborative relationship between our companies."

RealNetworks had alleged in its December 2003 lawsuit that Microsoft had abused its "monopoly power to restrict how PC makers install competing media players while forcing every Windows user to take Microsoft's media player, whether they want it or not." Real originally sought $1 billion in damages.

As part of the deal, Real will also end its direct involvement in antitrust investigations across the globe, including probes in Europe and Korea.

Gates, Glazer

Tuesday's move resolves yet another legal matter for Microsoft, which has already settled with rivals AOL Time Warner, IBM, Sun Microsystems, Novell and Be, among others.

RealNetworks had been one of the key companies still pushing for antitrust action against Microsoft and had been a major player in the European Commission's action.

European antitrust regulators said the settlement will have no impact on efforts to monitor Microsoft.

"It has no effect. The Commission will continue to work to ensure Microsoft's full compliance with the March 2004 decision. The Commission's role is to ensure respect for EU competition rules to the benefit of all consumers and companies in Europe--not to apply the rules to benefit any one individual company," said Jonathan Todd, a spokesman for the European Commission.

Microsoft's co-founder, meanwhile, addressed the benefits of the deal.

"This agreement will provide MSN's millions of customers with easier access to subscription services for the music and games they love," Microsoft Chairman Bill Gates said in a statement. "Digital music is one of the fastest-growing segments of the online-entertainment industry, and by promoting Rhapsody's subscription music services from within MSN, we will provide a better experience for our users."

Some analysts said the deal would allow both companies to draw their attention away from battles that had largely already been fought and focus on the more pressing matters of the present.

"It's one of those good deals for both companies," JupiterResearch analyst Michael Gartenberg said. "For Microsoft, it frees them up to focus on the competitors of the 21st century, like Google, or Apple (Computer) in the music space."

One of the big unanswered questions is whether the agreement will help both companies as they try to take on Apple, which has grabbed the lion's share of the legal online-music market with its iTunes Music Store and its iPod players.

Both Gates and Glaser said the deal should help their companies compete against Apple.

"Apple does great products and has done a number of them in the music (realm)," Glaser said. "At the end of the day, we think consumers want choice. We think consumers want openness...Over time--it won't happen overnight--I think 'open' will beat 'closed.'"

In the MSN part of the agreement, people using Microsoft's MSN Messenger instant-messaging service will be able to share and play music while chatting using Rhapsody's library. MSN Search will also be added into RealPlayer, and Microsoft will feature Rhapsody links from within music-related search queries on MSN.

In settling the antitrust disputes, Microsoft is providing a "variety of assurances" on the design of the Windows operating

CONTINUED:
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60 comments

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RealNetworks was lame anyways
I hated using their player. Just trying to download the thing was a problem. First they tried to hide the free version on their site. Second, there were marketing offers that were checked by default but hidden. You had to scroll to find them. Third, was their pathetic marketing.
Posted by bobby_brady (765 comments )
Reply Link Flag
Yes & No :-)
I agree with the negatives you site, I am also troubled with the way they are now doing some things... ...however, I have used "Real" since version 1, and I have always found their player to be excellent.

Since I am a firm believer in having a choice I am prepared to hang in there with REAL for now, and perhaps they will become less "shifty" in the future, and I am hoping this arrangement with MS will be a good thing for users everywhere.
Posted by Aardasp (31 comments )
Link Flag
RealNetworks was lame anyways
I hated using their player. Just trying to download the thing was a problem. First they tried to hide the free version on their site. Second, there were marketing offers that were checked by default but hidden. You had to scroll to find them. Third, was their pathetic marketing.
Posted by bobby_brady (765 comments )
Reply Link Flag
Yes & No :-)
I agree with the negatives you site, I am also troubled with the way they are now doing some things... ...however, I have used "Real" since version 1, and I have always found their player to be excellent.

Since I am a firm believer in having a choice I am prepared to hang in there with REAL for now, and perhaps they will become less "shifty" in the future, and I am hoping this arrangement with MS will be a good thing for users everywhere.
Posted by Aardasp (31 comments )
Link Flag
hahaha...
"Apple does great products and has done a number of them in the music (realm)," Glaser said. "At the end of the day, we think consumers want choice. We think consumers want openness...Over time--it won't happen overnight--I think 'open' will beat 'closed.'"

The tables have turned have they not??? Openness... Ya you say that now that your crippled and slowly dying turn back the clock 5 years before iTunes music store was around I seem to recall Real being the jackasses.
Posted by brian.lee (548 comments )
Reply Link Flag
Definition of openess
What they mean by openess is that they are free to compete with Apple in a closed source propietery type of way. They do not mean making all their codecs open source for the general public to enjoy.
Posted by mstlyevil (39 comments )
Link Flag
hahaha...
"Apple does great products and has done a number of them in the music (realm)," Glaser said. "At the end of the day, we think consumers want choice. We think consumers want openness...Over time--it won't happen overnight--I think 'open' will beat 'closed.'"

The tables have turned have they not??? Openness... Ya you say that now that your crippled and slowly dying turn back the clock 5 years before iTunes music store was around I seem to recall Real being the jackasses.
Posted by brian.lee (548 comments )
Reply Link Flag
Definition of openess
What they mean by openess is that they are free to compete with Apple in a closed source propietery type of way. They do not mean making all their codecs open source for the general public to enjoy.
Posted by mstlyevil (39 comments )
Link Flag
The usual MS solution....
... when they get caught with their foot off the base, the MS war
chest comes into action to buy off the plaintiff. It does seem to
work, right from the first when Bill got caught promising DOS to
IBM when he didn't have anything like that available. Allen saved
Gates' ass by shucking a DOS like item from a local programmer
for like $75,000. A little bit of MS innovating (maybe from CFM)
and IBM DOS was born. The war chest was begun, and it has
been very useful over the years.

Unfortunately, MS's technique of buying off the plaintiff
sometimes also puts the plaintiff into the MS fold. Real seems to
have been sucked in that way, and based on what I have seen of
Real, Gates would be better off sticking with WMP. And having
both Real and WMP is likely to cause MS interbreeding with very
defective results.

Time will tell, and in the meantime, I go on with iTunes, and my
IiPod Mega audio and video player. Someday I may go back and
see what happened to Real, or to WMP.
Posted by Earl Benser (4310 comments )
Reply Link Flag
Real...What a JOKE.
How about real just stops developing the REALly Crappy player and just allow MS to use the codecs within WiMP. Then Glaser can bask in the glory of his millions and go play with himself and steve jobs.
Posted by SystemsJunky (409 comments )
Link Flag
It begs the question
Q. When will M$ be able to make more money - licencing their technology to others, rather than locking up the respective market?

On that day......I celebrate - a M$ that enables others, takes the licencing money & does NOT stifle competition......and it COULD happen.
Posted by (409 comments )
Link Flag
The usual MS solution....
... when they get caught with their foot off the base, the MS war
chest comes into action to buy off the plaintiff. It does seem to
work, right from the first when Bill got caught promising DOS to
IBM when he didn't have anything like that available. Allen saved
Gates' ass by shucking a DOS like item from a local programmer
for like $75,000. A little bit of MS innovating (maybe from CFM)
and IBM DOS was born. The war chest was begun, and it has
been very useful over the years.

Unfortunately, MS's technique of buying off the plaintiff
sometimes also puts the plaintiff into the MS fold. Real seems to
have been sucked in that way, and based on what I have seen of
Real, Gates would be better off sticking with WMP. And having
both Real and WMP is likely to cause MS interbreeding with very
defective results.

Time will tell, and in the meantime, I go on with iTunes, and my
IiPod Mega audio and video player. Someday I may go back and
see what happened to Real, or to WMP.
Posted by Earl Benser (4310 comments )
Reply Link Flag
Real...What a JOKE.
How about real just stops developing the REALly Crappy player and just allow MS to use the codecs within WiMP. Then Glaser can bask in the glory of his millions and go play with himself and steve jobs.
Posted by SystemsJunky (409 comments )
Link Flag
It begs the question
Q. When will M$ be able to make more money - licencing their technology to others, rather than locking up the respective market?

On that day......I celebrate - a M$ that enables others, takes the licencing money & does NOT stifle competition......and it COULD happen.
Posted by (409 comments )
Link Flag
This is so bogus...
Now it seems like any company that can't put out a decent product goes after Microsoft, blaming them for their lame duck product.

Real didn't get crushed because of Windows Media Player and Microsoft it go crushed because they had crap software. I have never seen any program that installs for advertising crap the Real's products.

Real needs to get real and realize that their stuff sucks, it isn't worth money and it isn't worth downloading for free with all of the adware crap.

Microsoft shouldn't pay them a cent. But, I guess these days this is a businesses servive. They don't do it because they have a good product, a product that consumers like and want, they do it by law suites.

Robert
Posted by Heebee Jeebies (632 comments )
Reply Link Flag
This is so bogus...
Now it seems like any company that can't put out a decent product goes after Microsoft, blaming them for their lame duck product.

Real didn't get crushed because of Windows Media Player and Microsoft it go crushed because they had crap software. I have never seen any program that installs for advertising crap the Real's products.

Real needs to get real and realize that their stuff sucks, it isn't worth money and it isn't worth downloading for free with all of the adware crap.

Microsoft shouldn't pay them a cent. But, I guess these days this is a businesses servive. They don't do it because they have a good product, a product that consumers like and want, they do it by law suites.

Robert
Posted by Heebee Jeebies (632 comments )
Reply Link Flag
Consumers what choice
and indeed they have it. Many of them have chosen not to uses Real service. They've opted instead for iTunes and to a lesser extent Napster 2.0. Real did it's self in when decided to hide spyware in a version of Real player (which was discovered by GRC's founder Steve Gibson) and configuring the installation program in such a way as to maximize the potential to for user to sign up for extra services they didn't necessarly want as the opt-outs where hidden in various places through out the installation. As far as Real player goes, for a fair length of time they had their website designed to make it very hard to find the free version. Most of the obvious links lead to a pay version.
Posted by unknown unknown (1951 comments )
Reply Link Flag
Totally agree
Yep that's the time I used my choice to uninstall Real. No more spyware from Real.

Microsoft needs friends to make up marketshare against Apple. This is nothing more than a financial life-raft for Real, since Real and all the other "Play's for Sure" companies are failing financially.

Rio is down, Real was close, Napster is already so far in the red it's just a matter of time before that plug gets pulled.

tic tic tic...
Posted by (21 comments )
Link Flag
Consumers what choice
and indeed they have it. Many of them have chosen not to uses Real service. They've opted instead for iTunes and to a lesser extent Napster 2.0. Real did it's self in when decided to hide spyware in a version of Real player (which was discovered by GRC's founder Steve Gibson) and configuring the installation program in such a way as to maximize the potential to for user to sign up for extra services they didn't necessarly want as the opt-outs where hidden in various places through out the installation. As far as Real player goes, for a fair length of time they had their website designed to make it very hard to find the free version. Most of the obvious links lead to a pay version.
Posted by unknown unknown (1951 comments )
Reply Link Flag
Totally agree
Yep that's the time I used my choice to uninstall Real. No more spyware from Real.

Microsoft needs friends to make up marketshare against Apple. This is nothing more than a financial life-raft for Real, since Real and all the other "Play's for Sure" companies are failing financially.

Rio is down, Real was close, Napster is already so far in the red it's just a matter of time before that plug gets pulled.

tic tic tic...
Posted by (21 comments )
Link Flag
real networks = garbage
the best thing real player ever made, was the first few versions of real, where it was just a player that played .ram or whatever files. Now its trash, rhapshody is lame to, together with M$ it will be more garbage put with windows........ and windows media player is terrible!!! why cant someone just make a media player like VLC , make it come with all codecs!
Posted by digitallysick (103 comments )
Reply Link Flag
real networks = garbage
the best thing real player ever made, was the first few versions of real, where it was just a player that played .ram or whatever files. Now its trash, rhapshody is lame to, together with M$ it will be more garbage put with windows........ and windows media player is terrible!!! why cant someone just make a media player like VLC , make it come with all codecs!
Posted by digitallysick (103 comments )
Reply Link Flag
$aving Real...
... because Real needs $aving. I think they just need the cash ASAP... I see M$ winning in this deal. Those technology solutions to support Real are blank and can be done to support anyone. Let's just say Real will simply be aligned to the same level of partnership as those that can be listed in the Media Player's guide. Pffft...
Posted by Mendz (519 comments )
Reply Link Flag
$aving Real...
... because Real needs $aving. I think they just need the cash ASAP... I see M$ winning in this deal. Those technology solutions to support Real are blank and can be done to support anyone. Let's just say Real will simply be aligned to the same level of partnership as those that can be listed in the Media Player's guide. Pffft...
Posted by Mendz (519 comments )
Reply Link Flag
One other thought....
... this is an attempt by MS to try to outflank the EU court decision,
since Real was one of the primary plaintiffs. Sneaky litte bunch of
lawyers at MS = perfect match for Ballmer
Posted by Earl Benser (4310 comments )
Reply Link Flag
Doh....
This version of the article points that out.

Sorry for my flair for the obvious........
Posted by Earl Benser (4310 comments )
Link Flag
One other thought....
... this is an attempt by MS to try to outflank the EU court decision,
since Real was one of the primary plaintiffs. Sneaky litte bunch of
lawyers at MS = perfect match for Ballmer
Posted by Earl Benser (4310 comments )
Reply Link Flag
Doh....
This version of the article points that out.

Sorry for my flair for the obvious........
Posted by Earl Benser (4310 comments )
Link Flag
Microsoft, the Michael Jackson of Tech
MS continues to staunch legal wrangles by infusing cash into the former competitors. Sounds like the Michael Jackson approach to me.

Meanwhile, Real is like the Woolworths of Tech. They sell nothing but junk and are soon to be out of business.
Posted by (174 comments )
Reply Link Flag
That's funny
I think I'll use that line, MS uses the Michael Jackson method of settling lawsuits. :-)
Posted by R. U. Sirius (745 comments )
Link Flag
Microsoft, the Michael Jackson of Tech
MS continues to staunch legal wrangles by infusing cash into the former competitors. Sounds like the Michael Jackson approach to me.

Meanwhile, Real is like the Woolworths of Tech. They sell nothing but junk and are soon to be out of business.
Posted by (174 comments )
Reply Link Flag
That's funny
I think I'll use that line, MS uses the Michael Jackson method of settling lawsuits. :-)
Posted by R. U. Sirius (745 comments )
Link Flag
Meanwhile, in other news
Glaser may be happy now, but let's see what Apple has in store at their "special event." My guess is that is will be something that Glaser will absolutely despise.
Posted by (174 comments )
Reply Link Flag
Meanwhile, in other news
Glaser may be happy now, but let's see what Apple has in store at their "special event." My guess is that is will be something that Glaser will absolutely despise.
Posted by (174 comments )
Reply Link Flag
Whats next?
I wonder if Microsoft and Realplayer might not become one in the same in the future. I would not be surprised if MS buys out Real Networks after they establish a alternative to Apple and I-Tunes. The deal they struck almost assures that Real will be Apple's biggest competition in the next year or so.
Posted by mstlyevil (39 comments )
Reply Link Flag
Whats next?
I wonder if Microsoft and Realplayer might not become one in the same in the future. I would not be surprised if MS buys out Real Networks after they establish a alternative to Apple and I-Tunes. The deal they struck almost assures that Real will be Apple's biggest competition in the next year or so.
Posted by mstlyevil (39 comments )
Reply Link Flag
Real's own Rhapsody uses Windows Media Player
Real sued MS over windows media player but before the lawsuit was even filed, Rhapsody was using the WMP and IE... shoot, they won't work without them. If MS was so evil at the time that they had to sue them, why did they continue to use MS's own products in their software/

Again, Rhapsody cannot be used if WMP is not installed. This is a Real product and has been that way since the day it came out.
Posted by Don Key (186 comments )
Reply Link Flag
What choice did they have?
Isn't Rhapsody intended to be used with their online music store to purchase music, and that music is intended to be playable on portable music players? As such, what choice did they have? The only audio format that provides DRM and is supported by all the media players out there (other than the iPod) is Windows Media Audio.
Posted by (12 comments )
Link Flag
Real's own Rhapsody uses Windows Media Player
Real sued MS over windows media player but before the lawsuit was even filed, Rhapsody was using the WMP and IE... shoot, they won't work without them. If MS was so evil at the time that they had to sue them, why did they continue to use MS's own products in their software/

Again, Rhapsody cannot be used if WMP is not installed. This is a Real product and has been that way since the day it came out.
Posted by Don Key (186 comments )
Reply Link Flag
What choice did they have?
Isn't Rhapsody intended to be used with their online music store to purchase music, and that music is intended to be playable on portable music players? As such, what choice did they have? The only audio format that provides DRM and is supported by all the media players out there (other than the iPod) is Windows Media Audio.
Posted by (12 comments )
Link Flag
Lexxe, the next Google?
Please have a look at the new All-Australia world class search engine - Lexxe:

www.lexxe.com

and please read the news below:

Lexxe, the next Google? [Source: DSI. Le carnet des sites de recherche, Canada, Oct. 11th, 2005]

<a class="jive-link-external" href="http://www.lexxe.com/lexxe/about/news/news_3.cfm" target="_newWindow">http://www.lexxe.com/lexxe/about/news/news_3.cfm</a>

or the original version in French at:

<a class="jive-link-external" href="http://www.dsi-info.ca/moteurs-de-recherche/2005/10/lexxe-le-prochain-google.html" target="_newWindow">http://www.dsi-info.ca/moteurs-de-recherche/2005/10/lexxe-le-prochain-google.html</a>
Posted by (2 comments )
Reply Link Flag
 

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