August 17, 2004 6:40 AM PDT

RealNetworks slashes song prices

RealNetworks on Tuesday kicked off a high-profile digital music marketing campaign, highlighting the new iPod-compatible technology that has swung the company into conflict with Apple Computer.

For a limited time, RealNetworks will offer song downloads from its music store for 49 cents, along with half-price albums. A nationwide print, radio and Web marketing campaign will promote the offer, along with a Web site touting "freedom of choice" for online music consumers.

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Who's right in iPod fight?
RealNetworks' reverse-
engineering of Apple's
music player puts two tech
passions at loggerheads.

Songs downloaded from Apple's iTunes service and from other online music stores tend to be priced at about 99 cents apiece.

But the offer won't come cheaply for RealNetworks. The company said Tuesday that the campaign could increase its expected third-quarter loss by a penny per share. It now expects a net loss for the three-month period to be between 3 cents and 5 cents per share, rather than the anticipated 3 cents to 4 cents it had previously reported.

The company said it remains committed to reaching quarterly profitability, excluding antitrust litigation expenses, by the end of this year. For the third quarter, RealNetworks said, its loss excluding antitrust expenses will be between 1 cent and 3 cents per share.

The digital music campaign marks the second wave of publicity around the company's "Harmony" technology, which effectively recreated a version of Apple's proprietary copy-protection technology without permission. That has allowed RealNetworks to be the first non-Apple store that can distribute songs directly compatible with the iPod music player, despite strong protests from Apple itself.

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find harmony?

Real's CEO has big
plans for his company's
new technology, Apple
lawsuit or no.

"To me, it's not ambiguous that this is the right thing for the industry and the right thing for the consumer, and so we're happy to take the case forward to the court of public opinion," RealNetworks Chief Executive Officer Rob Glaser said.

RealNetworks' campaign highlights what many in the digital music industry say is one of the most important issues facing the young business. Digital song stores run by Apple, Sony, RealNetworks and Microsoft-aligned rivals all distribute songs in incompatible formats, limiting the kind of devices on which the music can be played.

Music industry executives have worried that this incompatibility will turn off consumers who are used to buying a CD and playing it on any company's hardware.

RealNetworks has pressed Apple to license its FairPlay copy-protection technology, which is required for a copy-protected song to play on the iPod, but Apple has refused. Online music store Virgin Mega also has asked Apple to allow other music distributors access to its iPod, even complaining to the French Competition Council.

Apple CEO Steve Jobs has said that allowing the iPod to play rival companies' downloads wouldn't make good business sense, however. The company has been deeply critical of RealNetworks' efforts to win access to the iPod without permission.

Commentary: Real
lobs a new grenade

Discount-priced songs
and Harmony software
will shake up the market.

"RealNetworks has adopted the tactics and ethics of a hacker to break into the iPod, and we are investigating the implications of their actions under the (Digital Millennium Copyright Act) and other laws," Apple said in a statement a few days after RealNetworks' initial software release. "We strongly caution Real and their customers that when we update our iPod software from time to time it is highly likely that Real's Harmony technology will cease to work with current and future iPods."

Analysts said RealNetworks' initial announcement has had little tangible effect on the digital market so far, but that its 49 cent download offer will likely prove attractive to consumers.

"There hasn't been a huge amount of fallout at this point, other than Apple not being pleased," said Jupiter Research analyst Michael Gartenberg. "This promotion gives consumers a chance to get to know Real. The challenge will be to keep them coming in when songs aren't half-price."

RealNetworks' new software, which is now available to consumers at the company's Web site, also allows downloads to be transferred to players that use Microsoft's Windows Media format, although this has caused less controversy.

RealNetworks Chief Strategy Officer Richard Wolpert said the Rhapsody subscription service, which currently sells songs that are burned to CD, also will offer multiformat Harmony downloads later this year.


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good luck Real --- hah
I predict Real will lose millions on giving away music at a loss,
and then get into a big lawsuit with Apple which, even if they
don't necessarily lose, will cost them large to defend.
What really are the music biz folks thinking here? That it's not
okay to rip off music, but it's okay to crack the iPod? huh?

Anyway, this shall be interesting to see what happens.
Posted by (4 comments )
Reply Link Flag
For now...
This might work for a little while, but as soon as Apple releases
an update to make iPod incompatible with Real's store, which is
very likely, most customers will leave. The fact that Apple has
70% music store marketshare means that almost everyone with
an MP3 player using online stores has an iPod. Still, a nice try on
Real's part, but like the other person before me said - they'll
probably just lose a lot of money.
Posted by iKenny (98 comments )
Reply Link Flag
This could go the right way.
Real is not breaking the DMCA as they are not actively removing, nor providing a way to remove copyrighted materials. They are using similar technology to make their songs compatible.
Doesn't matter anyway, the RIAA will still get involved and say that it IS against the DMCA and some liberal judge will listen to them, not the law.
Posted by reinmasamuri (3 comments )
Reply Link Flag
But the contract...
Even if Real is not breaching the DMCA, it is likely they are
breaching the contract on the iPod, the one they agreed to when
they used the product, which states that the owner may not
reverse engineer the software on or used with the iPod.
Posted by iKenny (98 comments )
Link Flag
Blah Blah
Real is forgetting? (or just stupid?) that a huge percentage of
iPod users use Mac's - and -ummm last time I checked REAL's
software wasn't compatible with Mac's! What hypocrites! A large
chunk of iPod users can't even download the cheap 0.49$
tracks!! Again, pathetic hypocrites!!

Plus reals's software is nowhere near as sophisticated as Apple's
iTunes (actually this point is why iTunes is doing so well with
both PC and Mac users compared to the plethora of WMA stores
and Real) - so real will lose once again! Their days are numbers
and this is a last deparate attack. Poor real.

Real has set up a pathetic anti-Apple site here <a class="jive-link-external" href="http://" target="_newWindow">http://</a> It had a petition called 'Hey
Apple don't break my iPod' but it looks like it has been pulled - I
read many of the 200 or so signatures - about 98% were against
Real!! Paul Thurrott (notorious anti-Apple/Linux/Unix/BSD/
Open-source pro Wintel nut) even put a link to it on his blog -
he called it 'good stuff' guess he didn't read it lol - what a fool.
Posted by dirk128 (31 comments )
Reply Link Flag
So pathetic...
Hahahahaha.... I checked that site you mentioned and signed the petition as "REAL sucks my donkey, get LIMEWIREANIME" |

Then I went to view the "48" signatures... heres what they say. What whimps! Just show the NAMES, idiots.

48 Total Signatures

-------------------------------------------------------------------------------- has temporarily disabled the display of email addresses for signatories who chose to make their address public.We have done this to reduce the spread of harmful new viruses which harvest email addresses from the web cache of infected computers. This will also prevent spammers from harvesting email addresses from this site.
Posted by (60 comments )
Link Flag
Real Needs To Practice What It Preaches!
If Real was really all about "Freedom Of Choice" then
they would offer their content beyond the "Windows
Only" crowd.

I want to see Real practice what they preach. Give us
"Freedom Of Choice" and offer your goods to not only
just Windows, but Mac, Linux, Amiga and etc...

It's time to give consumers "Freedom Of Choice" and
finally break the "Windows Only" experience!

Real's "Freedom Of Choice" falls short in the true
meaning of the phrase. Consumer freedom spans beyond
just "Windows Only" and I think it's time that these
companies start realizing that.
Posted by JuggerNaut (860 comments )
Reply Link Flag
Real's Offering a Nightmare
Real's "Choice" does not extend to Mac users, who are possibly
still a majority of iPod users, and at least a significant minority...
the store is simply NOT AVAILABLE to us. This is a "choice?"

And for those unwary Windows/iPod users, your "choice" to use
Real means that you are either (a) locked out of ever buying
music from the iTunes Music Store forever, or (b) forced to do a
clumsy manual update every time you buy from Apple... seems
that Real REQUIRES you to use THEIR jukebox every time you
update in the future.

Some folks see this as Real tweaking Apple's nose. To me, it
looks like Real doing a bait'n'switch on consumers. Music ought
to be enjoyable and fun, not a techno nightmare of mismatched
software like Real is claiming is a "choice."
Posted by WaltFrench (9 comments )
Reply Link Flag
Real crummy files
Red Book CD Audio was developed in the early 80s.

MP3 is inferior to pure Red Book CD Audio.

Apple iTunes is inferior to MP3.

Real media is inferior to Apple iTunes.


Conclusion: Sturgeons law still holds. 90% of everything IS crap. And the fact that they charge money for it is what makes me write this post.
Posted by (60 comments )
Reply Link Flag
REAL - the AL QAEDA of Technology
This is from the company that tries to lock away every content on the internet so they can charge a subscription?

This is from a company that took down the comments on their "freedom of choice" page - guess free speech contradicts with your Al Qaeda version of 'freedom of choice.'

Where is our freedom of choice for Real's RM/RAM files? Where's my converter for that file format to Mp3?

Where is my freedom of being able to use the REal store if I'm using anything but WINDOWS?

ALL music stores were closed to macs so apple had to invent one - PC users abandoned their stores in droves to shop at Apple's so Real's only response is to throw a brick through a competitor's front window?

Like Al Qaeda, they are more interested in destroying everything/anything just to prove they can - and in the case of Real - better to destroy consumer's ease of use now for their version of how to better make money?
Posted by jbelkin (167 comments )
Reply Link Flag
Uncool Joe...really uncool
You have about as much tact as a nuke joke at a 9|11 memorial.
Posted by Jonathan (832 comments )
Link Flag
Rob Glaser: Socialist, Terrorist, Al Franken supporter
Read the interview with Glaser. This is damning. He is an AlFranken-KoolaidDrinking-TerroristSympathizing-Socialist.


I will not allow an anti-american, anti-consumer madman to sit atop his ivory tower and try to manipulate my world.

The attack begins.
Posted by (60 comments )
Reply Link Flag
You must be lost....
...this isn't the Rush Limbaugh show....
Posted by johnnycnote (3 comments )
Link Flag
What a deal! 49ยข for songs I still can't download.
Setting aside the fact that I wouldn't need Harmony to put Real's
music on an iPod if I were using a Windows PC. Real's marketing
still avoids true competition by refusing to provide software
solutions to the Mac users. Meaning a deal for half price music
would cost me more due to the fact I'd have to buy hardware I
have no interest in using to use an OS I hate using to run Real's
software some of which is complete unnecessary.
Posted by ScifiterX (69 comments )
Reply Link Flag
P.S. No Offense to those who use PCs.
I realize some people like PCs and have no trouble using them.
More power to them. This still doesn't make Real any less greed,
dishonest, or dumb.
Posted by ScifiterX (69 comments )
Link Flag
What I want: no monthly fees...
...and a flat rate per song. There aren't enough songs on these services that I'd want, so there needs to be an option for people who just want to sign on occasionally and download a particular song for a higher price....
Posted by johnnycnote (3 comments )
Reply Link Flag

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