TMO Reports - RealNetworks Confirms Talks to License Harmony
by , 1:05 AM EDT, July 29th, 2004
An executive of RealNetworks, Inc. has admitted that the company is in talks to license it's Harmony digital music software, which lets users of Real's digital-music service play their downloads on a number of portable devices, including Apple's iPod.
In an interview with CNN/Money reporter Eric Hellweg, Real chief strategy officer Richard Wolpert said, "We haven't announced [Harmony licensing plans], but we're in discussions and happy to be in discussions with people. Let's grow the industry."
On Monday, RealNetworks announced Harmony - a technology that breaks through Apple's technology using reverse engineering to gain the ability to play its music files on an iPod. RealNetworks did not seek permission from Apple before releasing the software.
Until now, other companies have been unable to offer people the ability to buy music from their service and play it on the popular iPod, which is the best selling portable music device in the world. Apple has blocked that ability by refusing to license the use of its FairPlay DRM to companies seeking iPod compatibility.
Songs bought through the iTunes Music Store are encrypted using FairPlay, which works only with the iPod. In addition, the iPod doesn't support DRM technologies used by other services, like Windows Media Audio and RealNetworks' Helix technology.
Mr. Hellweg theorizes that Apple is on the cusp of having to make a tough decision on changing its mind and licensing Fairplay, or risk having companies like RealNetworks find legal ways around allowing people to buy music through other online music services and legally play their files on the iPod.
"Apple may yet decide to challenge Harmony in court, but it should carefully think through the consequences: Harmony may actually prove beneficial to Apple and the industry as a whole....The question the company now must answer is, Is it strategically more important to preserve its closed system, or is the iPod the future profit machine for the company? In the latter case, it should pump up sales numbers at any reasonable cost. It's quite a pickle<' Mr. Hellwig writes.
Observer Comments
This is a smoking gun... cloak and dagger... a poker game with a bluff that asks Apple to ante up or to buy the pot.
If you look at Real's business strategy as of late -- you would think it has given up on all of it's other content solutions for making them money. They are betting the farm on the iPOD and the iTMS.
Just like the technology that kept DVDs protected - cracked and posted online, everyone is making dups of flicks rented at blockbuster... so comes the hacks for iTMS online with PlayFair. Now real has somehow "reverse-engineered" using something similar to the hack online that breaks FlairPlay's DRM and are going to license to others.
This is a great game of Poker -- do they really have a product called Harmony? is it Real's to license? Does this sound like the compaq story all over again?
Naah-- Real wants out of the market, but doesn't want to concede to Microsoft... Real's CEO is crying out to Apple; "Please buy out our company!"
We hate MS too, and we offer more content solutions that can be gained further with the power of Apple behind it. Yep, this is what Real is saying!
You heard it here first!!!
I've noticed a lot of times when a company starts acting crazy, the first thing people will say is that the company wants to be bought. Sometimes, people, their management really is made up of people that crazy.
I think Real is being very presumptious here. Even before they know if there will be a backlash from Apple (how can you assume there won't be), Real gets ahead of themselves and publicily announce that they are licensing this technology. Apple *may* have let them go before since they were in the odd position of Real both possiblily hurting iTunes while possibily helping sell iPods, but now Real is practically offering to license Apple's technology.
I can't think of any other possible outcome other than Apple going hard after Real.
Thu Jul 29, 2004 6:28 am Subject: Why would Apple..
Thu Jul 29, 2004 8:22 am Subject: Maybe Apple Won't Be The Microsoft Of Music
"Until now, other companies have been unable to offer people the ability to buy music from their service and play it on the popular iPod, which is the best selling portable music device in the world."
A correction for your article. eMusic claims to sell music in the MP3 format, which can be played on every generation of iPod. You need to say "protected music" for your statement to be true.
Right on, Kircle.
If Real licenses Harmony with the Fairplay portion to other stores, Apple could certainly claim injury since this would interfere with Apple licensing Fairplay. Such licensing would be beyond the scope of "reverse engineering for the purpose of compatibility." It would be reverse engineering for the purpose of selling technology to make a profit.
In any case, Apple should just make a big deal of Real's small and declining market share and its shaky finances, implying but saying that they are close to going under. And a whole lotta good Harmony will do you then when there is no one to upgrade it after Apple breaks it with a change to iTunes and the iPod.
QuoteGuest wrote:
This is a smoking gun... cloak and dagger... a poker game with a bluff that asks Apple to ante up or to buy the pot.
If you look at Real's business strategy as of late -- you would think it has given up on all of it's other content solutions for making them money. They are betting the farm on the iPOD and the iTMS.
Just like the technology that kept DVDs protected - cracked and posted online, everyone is making dups of flicks rented at blockbuster... so comes the hacks for iTMS online with PlayFair. Now real has somehow "reverse-engineered" using something similar to the hack online that breaks FlairPlay's DRM and are going to license to others.
This is a great game of Poker -- do they really have a product called Harmony? is it Real's to license? Does this sound like the compaq story all over again?
Naah-- Real wants out of the market, but doesn't want to concede to Microsoft... Real's CEO is crying out to Apple; "Please buy out our company!"
We hate MS too, and we offer more content solutions that can be gained further with the power of Apple behind it. Yep, this is what Real is saying!
You heard it here first!!!
Yeah - we heard it here (at TMO) first - months ago. Though you're right, this is not news. Real has been going at this for some time., trying to get Apple to buy them out.
Nice try, though, Guest.
Thu Jul 29, 2004 11:47 am Subject: Re: Maybe Apple Won't Be The Microsoft Of Music
QuoteRealityCheck wrote:
Appleworks reversed engineered MS Word and Excel formats, it's fair play for Real to reverse engineer Apple iTunes format.
Actually, no. In fact Apple has relegated Works to the education market thus providing Microsoft easy access to the Macintosh market to sell Office to the home and business customer.
Apple did not "reverse engineer" Office components.
QuoteRealityCheck wrote:
Appleworks reversed engineered MS Word and Excel formats, it's fair play for Real to reverse engineer Apple iTunes format. Steve Jobs dream of gouging iLemmings for years and years with overpriced music may be coming to an end.
Actually, I suspect that Apple has a licence obtained a few yeaars back when MS was sold a block of nonvoting stock. I know there was a cross licencing of patents that was part of that deal.
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