Real Buying MP3 Developer

Real Networks Inc. Tuesday purchased privately-held Xing Technology Corp., one of the first companies to develop MP3 software.

The deal comes one day after IBM Corp. announced it was teaming up with Real to develop applications that will enable consumers to take advantage of growth in the Internet music market and go head-to-head with the popular MP3 format. Software giant Microsoft Corp. is set to detail its new format, MS Audio 4.0, later Tuesday at Spring Internet World ’99.

Xing released its first MP3 application in 1990. In the last year, the format’s popularity has exploded as artists embrace its ability to deliver CD-quality audio in tightly-compressed files.

Real will use its stock to pay for the transaction, valued at a maximum of $75 million. The company expects to record an unspecified one-time charge to pay for the deal, which is expected to close in the third quarter.

Rob Glaser, Real’s founder and chief executive officer, said the deal will give his company an opportunity to take advantage of MP3’s potential by embracing artists and others who want to distribute their work in the format.

“Moreover, we bring Xing’s world-class development team into RealNetworks, we’ve greatly enhanced our efforts to lead and accelerate the development of the digital distribution of music and other forms of audio and video,” he said.

Hassan Miah, Xing’s chief executive officer, said Real provided the best opportunities to grow MP3 technology.

“By combining our standards-based technology with RealNetworks’ market-leading RealSystem G2, the near ubiquity of their 57 million RealPlayer registered users and their many strategic partners, we think this acquisition has helped to create a company even more able to deliver the most exciting digital audio experience,” he said.

Xing’s engineering team will remain at the company’s San Luis Obispo, Calif., headquarters which will become a RealNetworks development facility. The companies did not say whether any layoffs are expected as a result of the deal.

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