January 5, 2004 5:23 PM PST

Real to launch song store

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RealNetworks is expected to throw its hat into the digital song store ring later this week, releasing a download service based on technology similar to that used in Apple Computer's iTunes store, according to sources familiar with the plans.

The new pay-per-song service, which is expected to be announced at the Consumer Electronics Show (CES) in Las Vegas this week, will see the company playing catch-up to Apple, which has won kudos from Windows and Macintosh users for its iTunes store and jukebox software.

RealNetworks previously has focused on subscription products and said late last year that its Rhapsody and RealOne music services collectively had reached more than 350,000 subscribers.

Sources said the new store will be based on the Advanced Audio Coding (AAC) format--as are the songs in Apple's rival service--but wrapped in RealNetworks' own Helix digital rights management technology.

That will limit the number of digital devices the songs can be played on, because most portable music device makers support only MP3 and Microsoft technology. Analysts, however, said the market is potentially still young enough to support the addition of RealNetworks' offering.

"The online music service provider market is still early in its development," IDC analyst Susan Kevorkian said. "Real is certainly not taking itself out of the running...The issue with them will be working with MP3 player manufacturers, helping to make it cost-effective for those companies to support" Helix.

The release of RealNetworks' new service highlights increasing fragmentation in the online music market, in which different companies continue to adopt incompatible copy-protection mechanisms, each of which in turn are supported inconsistently by different portable music players.

For a song to play on a digital device, the gadget must both be able to play the underlying music format and to decode any proprietary content locks that protect against unauthorized copying. For example, both RealNetworks and iTunes will distribute songs encoded in the AAC format, but Apple's iPod will not be able to play Helix-wrapped songs unless Apple licenses that technology.

Along with Real, Apple, Microsoft and Sony all offer or plan to offer music wrapped in their own proprietary anticopying technologies. Most of the other song stores proliferating online, including Napster, MusicNow and Musicmatch, use Microsoft's digital audio format.

However, RealNetworks' adoption of the AAC format does add momentum to a standard that many see as the logical competitor to Microsoft's proprietary Windows Media technology.

AAC is part of the broad multimedia technology standard set by the Moving Picture Experts Group and is essentially the modern successor to MP3, itself more than a decade old. Audio experts say the newer format offers the ability to make compressed digital files sound more like the original recordings, while taking up less computer memory.

Once songs are encoded in that basic AAC technology, RealNetworks' song store will add the company's Helix digital rights management wrapper, which was announced a year ago at the CES trade show. Those content-protection tools were billed by company executives at that time as a way to decrease the fragmentation caused by different multimedia formats, because they could be used with virtually any audio or video technology.

Few device makers have said they have plans to support the Helix rights-management technology, but announcements from manufacturers are expected soon, sources said.

 

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