October 11, 2005 12:15 PM PDT

Details of the Microsoft-Real agreement

The settlement of RealNetworks' antitrust lawsuit against Microsoft marks a historic moment for both companies and could substantially alter the digital-music and online-media markets. Here's a quick look at the settlement's key points.

What started the legal dispute between the companies?
After years of seeing its market share drop in the Internet multimedia software business, RealNetworks sued Microsoft for $1 billion on antitrust grounds in December 2003.

How much is the settlement worth?
In total, about $761 million. Microsoft has agreed to pay $460 million in cash up front and to pay an additional $301 million in cash and services to support, distribute and market RealNetworks' Rhapsody music services through its MSN service.

Can Microsoft can recoup some of the $301 million payment?
Yes. The company will earn credits for each Rhapsody subscriber who is referred through MSN. The amount per subscriber was not disclosed.

What changes are the companies making that address the antitrust charges?
Among other things, Microsoft will assist in the performance of the RealPlayer on computers running the Windows operating system. Microsoft also will make it easier for consumers to modify their preference for playing media files on a PC.

Are there any changes planned for Vista, the successor to Windows XP?
Yes. If a consumer attempts to play a media file created for the RealPlayer, but the RealPlayer has not yet been installed on that PC, the user will be directed to a Web page from which the player can be downloaded.

How will RealNetworks assist Microsoft?
RealNetworks will support MSN Search and promote "Windows Media technologies" on the mobile-music service, called Rhapsody to Go.

What other tangible things will consumers notice as a result of the new collaboration?
Users of MSN Messenger will be able to play music from the Rhapsody catalog of 1 million songs while chatting. And when using MSN Search to find music, consumers will be presented with the Rhapsody catalog.

Is the agreement focused solely on music?
No. A series of "casual games" created by RealNetworks will be offered as a subscription service on MSN and developed for Xbox Live Arcade, the online companion to the upcoming Xbox 360 game console.

Does this affect all RealNetworks' legal claims?
Yes. As a result of the agreement, RealNetworks will drop the lawsuit brought against Microsoft in the United States, and end its participation in antitrust proceedings in Europe and South Korea.

 

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