MESSAGE
| DATE | 2004-07-30 |
| FROM | Ruben Safir
|
| SUBJECT | Re: [hangout] Oh my god - Apple is complaining about Competition!
|
'); //--> Ten O'Clock Tech
The IPod Is A Battlefield
Arik Hesseldahl, 07.30.04, 10:00 AM ET
NEW YORK - Apple Computer is "stunned," it says, by the behavior of
RealNetworks.
Stunned that Real (nasdaq: RNWK - news - people ) wants to let its
customers play their music on Apple's iPod. Stunned that someone would
dare create--some would say, innovate--a method to convert digital songs
from one format that Apple's (nasdaq: AAPL - news - people ) iPod
doesn't natively support, into one that it does.
Earlier this week Real stunned the digital music scene with the
announcement that its software, "Harmony," would allow its customers to
play songs purchased on Real's Rhapsody digital music download service
and play them on an iPod or other player.
But it's not clear exactly why Apple is so upset. Does this not increase
the potential market for iPod sales? Perhaps, yes. But it also opens up
the possibility for an increase in the number iPod owners who don't use
Apple's iTunes Music Store to buy their music, and that is a sore point
with Apple.
While it's quick to brag about how its customers have paid to legally
download some 100 million songs--making it far and away the most
successful legal music download service in creation--the black market of
songs downloaded from file-sharing services like Kazaa, eDonkey,
Bearshare and others is much higher. One Yankee Group forecast suggests
that by next year the number of songs downloaded from file-sharing sites
could reach 7.5 billion. Those songs are typically MP3s that are
universally playable on iPods and Rios and scads of other devices.
And it is on this issue that Apple is vulnerable. In this space we've
railed against Apple rival Sony (nyse: SNE - news - people ) and its
"walled garden" to digital music downloading and players (see: "The
Won't Be IPod Killer"). Despite its success, Apple, because of its lack
of flexibility, may in time find that consumers want a digital music
experience that is as universally compatible as a CD. This week's move
by Real appears to be an expression of that desire. Apple's iPod/iTunes
combo isn't nearly as closed a system as Sony's, but it certainly could
stand to be a bit more open.
Who would want to buy music in any form that can only be played on one
brand of device? That is, in effect, what is happening with Apple's
iTunes. When you download a 99-cent song, you download a digital file
that is encoded in Apple's Advanced Audio Codec (AAC) format, which as
yet only Apple supports. Sure, future mobile phones from Motorola
(nyse: MOT - news - people ) will support iTunes songs too, but only a
few at a time. But it's a sure bet that there are more MP3 files on
iPods than AAC files.
This spat takes place against the backdrop of a struggle on the part of
Real to remain relevant in the music download business. Its Rhapsody
service is scoring some limited success with some 550,000 subscribers,
according to its July 28 quarterly earnings report. What it doesn't
appear to have is music player hardware that it can call its own. CEO
Rob Glaser has publicly tried to pressure Apple CEO Steve Jobs to open
up the iPod to more formats.
One would think Jobs and Apple would run the risk of looking like a
villain opposed to consumer choice and innovation. And while that
argument may have some merit, the bad vibes aren't likely to stick to
Apple because of the iPod's pop culture status. Glaser and Real--right
or wrong--are more likely to end up looking like the unpopular kid
bitter about not being invited to the cool kids' party.
Appearances do matter. Apple should beware looking like it's too
jealously guarding the door to the iPod party, and should ready a
contingency plan under which companies backing other formats, like Real,
can join the party, but only under terms that Apple lays out. It won't
hurt Apple one bit over the long term. The market demands openness and
flexibility, and Apple, of all companies, should have learned this
lesson by now. There was a time Apple owned the personal computer
business. We all know how that turned out.
Meanwhile Real is already in the midst of a legal fight with Microsoft
(nasdaq: MSFT - news - people ) (see: "RealNetworks Files Suit Against
Microsoft"), which last quarter cost $2.8 million, or more than 4% of
Real's revenue. The last thing Real needs is another major lawsuit,
though Apple is clearly ready to go on the offensive, saying it is
investigating the possibility that the Harmony software violates the
Digital Millennium Copyright Act, which heavily restricts the
development of techniques to work around copy-protection technologies.
Apple has ominously suggested that a forthcoming upgrade to its iPod
software will disable Harmony, which will no doubt prompt Real to find a
way to work around that, which will in time turn the iPod into a
technological battleground wherein consumers start to wonder whether
other players and music services might be worth a second look.
We've seen these kinds of back-and-forth battles before. Time Warner's
(nyse: TWX - news - people ) America Online and Yahoo (nasdaq: YHOO -
news - people ) have fought an on-again, off-again battle to lock out
users of Trillian, a third-party instant messaging software that seeks
to unify several IM services under a single program. The only real
losers were users. Both Real and Apple know this will be the result of a
prolonged battle. One hopes this fight won't last.
More Ten O'Clock Tech Columns
On Fri, 2004-07-30 at 22:28, Ruben Safir wrote:
> There's beef cooking in cyberspace.
>
> Apple Computer on Thursday accused RealNetworks of hacking its popular
> iPod after the competitor released software that lets iPod users
> download songs from RealNetworks' own RealPlayer music store.
>
> Previously, only Apple's iTunes software gave users the ability to
> purchase songs online and transfer them to an iPod. Apple uses its own
> Fairplay Digital Rights Management technology, which it has refused to
> license to other companies.
>
> "We are stunned that RealNetworks has adopted the tactics and ethics of
> a hacker to break into the iPod, and we are investigating the
> implications of their actions under the Digital Millennium Copyright Act
> and other laws," an Apple statement read.
>
> Although both the RealPlayer and iTunes stores offer downloads for 99
> cents apiece, the fundamental differences between the two services are
> in content — each offers its own share of exclusives — and quality. Like
> most services, iTunes downloads have a sound quality of 128 kbps. The
> RealPlayer music store is the only service to offer songs in 192 kbps,
> which is closer to CD quality.
>
> The technology in the new RealPlayer 10.5 beta software "follows in a
> well established tradition of fully legal, independently developed paths
> to achieve compatibility," RealNetworks said in a statement issued soon
> after Apple's. "There is ample and clear precedent for this activity.
> For instance, the first IBM-compatible PCs from Compaq. ... Consumers,
> and not Apple, should be the ones choosing what music goes on their
> iPod."
>
> Besides the iPod, RealPlayer 10.5 also offers compatibility with
> portable digital music players made by Creative, Rio, iRiver and more
> than 65 other manufacturers.
>
> For complete digital music coverage, check out the Digital Music
> Reports.
>
>
>
> ____________________________
> NYLXS: New Yorker Free Software Users Scene
> Fair Use -
> because it's either fair use or useless....
> NYLXS is a trademark of NYLXS, Inc
>
____________________________
NYLXS: New Yorker Free Software Users Scene
Fair Use -
because it's either fair use or useless....
NYLXS is a trademark of NYLXS, Inc
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