July 26, 2004 4:54 AM PDT

RealNetworks breaks Apple's hold on iPod

RealNetworks announced Monday that it has unlocked some of Apple Computer's most tightly held technology secrets, giving its music a way onto the popular iPod digital music player.

The announcement is part of a broader release of RealNetworks software, which will let songs sold from the company's online store play on a variety of portable devices, including the iPod and Microsoft-compatible rivals. RealNetworks has been selling songs from its digital song store since January, but the files could previously be played only on a few portable devices.

The new Harmony software, which RealNetworks said mimics the proprietary copy protection used in Apple's iTunes store, is sure to be controversial. Apple has previously refused to provide licenses to companies seeking iPod compatibility, and RealNetworks did not seek permission before releasing its own version of iPod-friendly software.

News.context

What's new:
New software from RealNetworks will let songs sold from the company's store play on a variety of portable devices including Apple's iPod and Microsoft-compatible rivals.

Bottom line:
Apple has previously refused to provide licenses to companies seeking iPod compatibility, and RealNetworks did not seek permission before releasing the software. The move could trigger intense legal scrutiny.

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"This is actually a natural extension to a decision we made two years ago with respect to different formats," said RealNetworks Chief Strategy Officer Richard Wolpert. "We think consumer choice is going to win out over proprietary formats."

RealNetworks' move marks a step away from what had been an increasingly confusing world of incompatible digital music formats and devices.

Record companies and consumer groups have been deeply critical of technology companies' decision to tie certain devices to specific music formats. Traditionally, CDs and DVDs have worked on any manufacturers' players, they note, while music downloads have been tied to specific brands of devices.

Indeed, several record company executives praised RealNetworks' independent steps to achieve compatibility with the iPod, even without Apple's consent.

"Up to now, the world of downloads has been far too close to a world where the CD you buy in one store wouldn't play on the CD player you bought in another," Larry Kenswil, president of Universal Music's eLabs division, said in a statement. "We applaud RealNetworks' efforts to help correct this situation and appeal to all people and companies in this area to work toward a world of universal interoperability."

Apple did not return requests for comment.

Apple maintains a dominant market share in the music download business, and RealNetworks hopes that the new compatibility with the iPod will help drive customers to its online store.

Dangerous ground?
RealNetworks has previously thumbed its nose at rivals in a similar way. Its 2002 Helix server, which sends media files out over the Internet, included the ability to stream Microsoft-formatted files--a capability only Microsoft servers previously had.

Last January, RealNetworks also announced that it had figured out how to let its PC software play songs purchased from Apple's iTunes store and save them onto the iPod.


News.commentary
Getting on the same
sheet of music

The new Harmony digital music
technology from RealNetworks
challenges Apple and Microsoft
to play better together.


The new Harmony software's ability to work with Microsoft devices is fairly straightforward. When a customer buys a song from RealNetworks' online store, the software will check what kind of portable device is attached to the computer and change the song into Microsoft's format if necessary. Microsoft has provided licenses to its Windows Media technology to many companies.

Harmony also will automatically change songs into an iPod-compatible format. But because Apple has not licensed its FairPlay copy-protection software to anyone, RealNetworks executives said its engineers had to re-create their own version in their labs in order to make the device play them back.

Although the company said this action wasn't technically "reverse engineering," the software could trigger intense legal scrutiny.

The license accompanying Apple's iPod says purchasers cannot "copy, decompile, reverse engineer, disassemble, (or) attempt to derive the source code of" the software.

Boston patent attorney Bruce Sunstein said courts have issued mixed opinions on how much reverse engineering is allowed for purposes such as making compatible products.

"The law is unsettled," Sunstein said. "We might find some litigation if Apple wanted to be aggressive."

Indeed, lawsuits have been sparked by similar previous cases. In one famous example, Atari Games subsidiary Tengen created cartridges that worked with Nintendo's NES game machine in the late 1980s, when Nintendo was barring any other company from doing so.

Nintendo sued and won when it was discovered that Tengen had obtained part of Nintendo's software code from the U.S. Copyright Office and used it to make its games compatible.

RealNetworks has staunchly maintained that it has not illegally used any of Apple's copyrighted software code, however.

"We certainly feel we have all the licenses and rights to do what we've done or we wouldn't have done it," RealNetworks' Wolpert said.

Analysts welcomed the move as a good step for consumers, who would be able to buy music from RealNetworks' store and not worry about having to stay permanently with one brand of player to use music purchased online.

"Right now if you're a consumer, you have to pick sides," said Forrester Research analyst Josh Bernoff. "With every track you buy you're going further down the path of incompatibility...This is going to create some pressure on Microsoft and Apple to provide similar levels of interoperability."

The Harmony software will be available in test form on RealNetworks' site Tuesday, and will ultimately find its way into a variety of products, the company said.

 

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