Real’s Harmony Arrives with Convergence

NEW YORK — Incompatible media players are becoming a drag on adoption
rates and growth curves, the chief strategy officer of RealNetworks warned the music and technology industry Tuesday.

Speaking at the Jupiter Plug.IN Conference & Expo here, Richard Wolpert said
the music industry still has to focus on making sharing music among a
variety of devices as easy on the consumer as possible.

No more “if you buy this, you can only play it with this device —
that’s confusing for people and a concern of music labels,” said Wolpert.
“Current device/store incompatibility will slow adoption.”

Wolpert cited DVDs as an example for the music industry to study and copy
in order to fix its own incompatibility problems. For example, if you bought
a DVD at Tower Records, would you accept it if that DVD would only work on a
player made by Philips?

“I don’t think this would have allowed for
proliferation of DVDs. But in the music space, that’s what we have,” he
said. “We do not think that’s something that’s been good for consumers or
for the industry.”

Wolpert said that’s why RealNetworks has launched
Harmony, a new digital rights management (DRM) translation system that
consumers can use to shift their music from one media device to another,
across different codecs , DRM systems and
platforms. Harmony works with digital media players from Creative, iRiver,
RCA, Rio, Samsung, palmOne and all four generations of Apple’s iPod.

It’s a way to solve this problem for consumers, all while protecting the
content with DRM, he said. Whatever platform you’re using to acquire your
music on a PC or computing device, that media can move to any device you
select for transfer with the “Harmony for portable devices” feature. “You
can buy a song [online] and move it to two different devices,” he continued. “It lets you
choose.”

Wolpert’s keynote came during day two of the conference, which is
sponsored by Jupitermedia, the parent company of internetnews.com.
Organizers said it is geared to assess and define the challenges
transforming today’s music business and offer insight into current industry
trends.

Indeed, JupiterResearch’s latest study on the industry said digital music
would hit $270 million in 2004, more than double last year. Sales are
forecast to hit $1.7 billion by 2009, which would total about 12 percent of
the industry, the study said.

Strauss Zelnick, the CEO of media company ZelnickMedia, said the four
main trends that are driving true media convergence have begun to
accelerate along with the economic recovery: digitization of media,
globalization of that media, consolidation of media ownership, and
conversely, fragmentation of audiences with the proliferation of new media
channels.

With digitization, he continued, “you’re getting more content in a
smaller pipe, and the pipes go in different directions. This continues to
influence every media business, as traditional analog media turns digital,”
said the former head of BMG Music.

But fragmentation is the most important of these trends to watch, Zelnick
added.

“The nature of the media business is that it used to rely on audience
aggregation” to sell advertising and make money. No more.

“Fragmentation is growing faster and faster as these channels
proliferate.” As the number of voices and audience grows, the aggregated
audience is declining, said Zelnick.

This will mean advertisers will have to be more
targeted than ever before, and why media ad dollars continue to shift into
direct marketing — especially interactive media.

Zelnick said three massive industries are now colliding and targeting
consumers: software, consumer electronics devices, and the communications
and entertainment industry.

“They will link billions of people, not just
with words, but with music, video and other media. This will usher in possibly the most creative and disruptive
time in the last 50 years of the media business.”

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