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April 15, 2004

RealNetworks looking for partners in old enemies

RealNetworks Inc yesterday said that CEO Rob Glaser approached his counterpart at Apple Inc to suggest a partnership, confirming much of a New York Times report yesterday that also suggests a Microsoft-RealNetworks tie-up.

By CBR Staff Writer

The report was based on an email sent from Glaser to Apple CEO Steve Jobs last week, which was leaked by sources close to Apple. It appears that Apple is not impressed with Glaser’s suggestions.

According to the paper, Glaser suggested a tie-up that would see Apple licensing its digital rights management technology to RealNetworks, which would in turn make Apple’s iPod music player the standard for RealNetworks’ music services.

The iPod is currently the leading digital music player on the market, selling over 800,000 units in the first quarter. It supports Apple’s iTunes store, which are protected with the company’s DRM system, Fairplay, but not RealNetworks tracks.

RealNetworks operates RealPlayer Music Store, which uses its own audio format, and RealRhapsody, which the firm acquired last year, which uses Microsoft’s Windows Media Audio format. Glaser said the firm could switch to WMA, the NYT said.

We are seeing very interesting opportunities to switch to WMA, Glaser wrote, the NYT reported. Instinctively I don’t want to do it because I think it leads to all kinds of complexities in terms of giving Microsoft too much long-term market momentum.

Microsoft has yet to open its digital music store, but has been getting a lot of traction for its formats with non-Apple portable digital music players, largely due to its DRM technology, where it is investing heavily.

RealNetworks, of course, has a track record of locking horns with Microsoft. The company sued Microsoft in December, claiming anti-trust law violations related to Microsoft’s bundling of Windows Media Player with Windows.

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It’s not known if Glaser’s very interesting opportunities to switch to WMA are related to settlement talks, or if settlement talks are even going on. Microsoft is, however, currently making a habit out of settling its way out of lawsuits.

The news comes at a tough time for RealNetworks, which has been evolving from a technology firm into one with more reliance on media services, and which is taking a critical media battering over the quality of its player software.

This article is based on material originally published by ComputerWire

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