For years, RealNetworks Chief Executive Rob Glaser has led his company through a process of constant reinvention, struggling to keep ahead of Microsoft's competitive steamroller.
On Tuesday, he and Bill Gates finally shared a stage, jointly announcing an end to RealNetworks' $1 billion antitrust lawsuit against Microsoft, and an ambitious joint marketing and development program that will see substantial integration of their music products during the next 18 months.
The agreement, more than half a year in the making, marks a historic turning point for Glaser and RealNetworks. The two companies will continue to compete in some markets, providing rival multimedia software, mobile-phone infrastructures and even music stores.
But with Microsoft funneling customers directly to RealNetworks' core Rhapsody music service and allowing the two companies' engineers to work together to improve compatibility of their software, much of the flash points will be gone. The settlement also frees both companies to focus on present-day threats such as Apple Computer's continued dominance of the digital-music market.
CNET News.com asked Glaser how the deal evolved and how it will change RealNetworks' competitive future.
Q: How did this deal come together? Glaser: It's a process that goes back to last August, or about a year ago. When we came out with the Harmony technology, I reached out to Bill (Gates) and said, "Hey, look, we think this is a very interesting technology and overall direction, which is to have interoperability among secure digital rights management systems." We had solved a lot of the hard problems associated with how you move things in a trusted domain from one format to another, and we did it with both the Apple format, FairPlay, and Windows Media.
When we shared that we were doing this with Microsoft, their attitude was, "Hey, this is great, this is good for customers." That gave us a sense that there was a common view of the importance of interoperability that we could build on.
Did you work with Microsoft engineers at that point?
Glaser: In the initial phase, when we were doing the initial development, we didn't--at least beyond the normal ways you work with the standard support mechanisms. Not at the level that we've subsequently done. While we decided not to do something around the launch or the aftermath of the launch of Harmony, it did become clear that there was an opportunity for collaboration.
As the outline of an approach came in, it became clear that putting together a deep technical and business relationship independently of resolving the legal issues that were pending was not likely to succeed. You've got to have the emotional energy to do a deep technical and business deal; you've got to put a lot of work into it. And if you've got something else out there, it's hard to align all those different sorts of energies.
When you were doing Harmony, were you originally thinking that it might lead to a resolution on the legal side as well? Glaser: We thought that Harmony was a good thing to do, and we did it because it was better for customers. And then having done it, it became a vehicle for engaging in conversations with Microsoft about compatibility and interoperability.
In order to get something like this to come together, you needed to get three different rings to work together in harmony, so to speak.
We didn't create it as a stalking horse, we created it because we thought it had merits for customers. But having created it, I think it showed a level of technical rigor and strategic commitment on our part to interoperability, so it probably helped establish a basis for technical collaboration between the two companies.
But then you also had to ask, in addition to the technical collaboration, can you reach common ground on economics? After all, we were settling a legal action that had value to it. And then can you reach agreement on a marketing approach. So in order to get something like this to come together, you needed to get three different rings to work together in harmony, so to speak. That it took a fair amount of time to do wasn't surprising, but it did in fact come together.
Over the last month we flipped the switch, and it went from something we thought we could do in theory to where we were convinced yes, this looks like something that's really going to happen.
So until the last month it was still theoretical, and things really got serious over the last month.
Glaser: Literally, the deal got signed at midnight last night. It was probably the weekend before last where it went from something where we thought it could happen, to let's schedule the board meeting to review it because it looks like we'll actually have something to talk about.
It was 18 months ago that you were talking to Apple and asking them to open up the iPod to be compatible with other services. Apple was adamant that they wouldn't, and you indicated that might push you toward Microsoft--which turned out to be prophetic. Do you see those events as being connected? Glaser: The foundation of the relationship with Microsoft has multiple
Wow Glaser, there's the pot calling the kettle black. Last time I checked, Real and Microsoft were as closed as Apple. Here's a concept, instead of ad hominem attacks on Apple, why don't you focus on building a reliable quality product instead of the spyware-junk you foist on the public?
As has been for years, which is why they had to dredge the bottom of law and file an "anti-trust" suit.
What you cannot achieve in a free market you can always convince some stupid jury of, if you confuse them enough.
And frankly Microsoft deserves it, having given in every single time in the past, set them up to have every Tom, Dick and Harry sue them for anti-trust. "Hey, they rolled over for THESE guys, let's sue them too and get a nice fat check."
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Unless you have vastly improved the Real Player I won't be touching it.
Wow Glaser, there's the pot calling the kettle black. Last time I checked, Real and Microsoft were as closed as Apple. Here's a concept, instead of ad hominem attacks on Apple, why don't you focus on building a reliable quality product instead of the spyware-junk you foist on the public?
other. A marriage made in jail.
What you cannot achieve in a free market you can always convince some stupid jury of, if you confuse them enough.
And frankly Microsoft deserves it, having given in every single time in the past, set them up to have every Tom, Dick and Harry sue them for anti-trust. "Hey, they rolled over for THESE guys, let's sue them too and get a nice fat check."