RealTime IT News

Real's Harmony Taps Apple's Core

RealNetworks CEO Rob Glaser's quest to have a file format that is compatible with all media players is working nerves over at Apple Computer.

The Seattle-based company released Harmony Technology, new digital rights management (DRM) translation technology that lets consumers securely transfer purchased music to every popular secure music device on the market, including ones from Creative, iRiver, RCA, Rio, Samsung, palmOne and all four generations of Apple's red-hot iPod.

Glaser said his company is focused on "compatibility as key to bringing digital music to the masses." While the name suggests cooperation and warm fuzzies, nothing could be further from the truth.

In his quest to gain market share against Microsoft's Windows Media Player, Glaser had unsuccessfully approached Apple CEO Steve Jobs about an alliance back in April. But instead of licensing the technology from Apple, Real has reverse engineered the connections into the iPod to come up with its DRM technology, released this week. When briefing analysts Friday, the company debunked suggestions that the Harmony technology is a wrapper, but instead promoted it as a combination of "transcoding" and "transcrypting."

That said, Harmony supports any device that uses the Apple FairPlay DRM, the Microsoft Windows Media Audio DRM, or the RealNetworks Helix DRM. At the Jupiter Plug.IN Conference & Expo in New York this week, Real is releasing a beta test version of RealPlayer 10.5, which would be the first consumer product to use Harmony Technology. The full product software is expected later this year in other music products from RealNetworks, including Real's Rhapsody subscription service.

Representatives of Cupertino, Calif.-based Apple and Redmond, Wash.-based Microsoft were not immediately available for comment.

With Harmony in place, Real said its RealPlayer Music Store will support more than 70 portable media devices, including all four generations of the iPod and iPod mini, 14 products from Creative, 14 from Rio, 7 from RCA, 9 from palmOne, 18 from iRiver, and products from Dell, Gateway and Samsung.

"If it works, the Real store and Real Jukebox player will see a large amount of traffic," David Card, JupiterResearch vice president and senior analyst, said.

But Rob Enderle, industry analyst and founder of Enderle Group, suggests that both Apple and Real may wish they'd done the license deal -- and Microsoft might be very pleased they did not.

"The buyer risk is that while existing iPods will probably work, Apple may respond by adjusting the software in newer iPods so they don't," Enderle told internetnews.com. "If you recall the Microsoft/AOL wars on IM compatibility, where every time Microsoft got their client to work, AOL changed the code and broke it, this could get ugly. On the other hand, it isn't like Apple can flash their installed base with new software. If only the new ones break, an increasing number of new buyers may return them and buy something else that will work, which creates a double risk for [Apple]. It may shift sales away from products that now appear to be unreliable, and they may lose existing customers who are no longer tied to iTunes."

Meanwhile, JupiterResearch analysts released a new study Monday stating digital music sales are more than double compared to last year. They reached more than $270 million in 2004 and are expected to grow rapidly to $1.7 billion in 2009, totaling 12 percent of consumer music spending. However, while digital music will return the U.S. music industry to growth after four years of steeply declining sales, digital music still will not replace CDs or bring music sales back to its 1999 peak. In fact JupiterResearch's Card suggests that subscription services like MusicMatch are the wave of the future.

"The so-called celestial jukebox is in sight," Card said, "But for now, it will appeal to music aficionados. The U.S. music industry must manage digital music as one of a series of incremental revenue streams, one that is in the same scale as licensing (e.g., ring tones, games and advertising)."

The new Harmony Technology comes at a time when all digital music companies are taking swipes at Apple's iPod player success.

Jupiter Research is estimating U.S. shipments of MP3 players will grow over 50 percent in 2004, to well over 5 million, and will continue to grow almost 50 percent per year for the next several years. And while Apple has the lion's share with upwards of 860,000 units shipped in the last three months (50 percent market share) and 70 percent dominance in all songs bought online, companies like Sony, Dell, Microsoft and Rio all are plotting their next moves to unseat Apple's leadership.

"A lot of the action in hard drive-based devices will be at the low end in terms of price and capacity that will help drive the market," stated JupiterResearch VP and Research Director Michael Gartenberg. "JupiterResearch surveys show that 77 percent of consumers who would purchase a portable music player would want no more than 1,000 songs on a player at any given time, regardless of the size of their music collection."

The Jupiter Plug.IN Conference & Expo and JupiterResearch are owned by the parent company of this Web site.