REAL NET WORKS VS. APPLE

Apple Attacks RealNetworks Plan To Sell Songs For iPod

LAURIE J. FLYNN

San Francisco

02-08-04

Apple Computer sharply criticized RealNetworks, the maker of media-playing software, last week, saying it was investigating the legal implications of RealNetworks’ decision to sell songs in Apple’s music format. It accused RealNetworks of adopting “the tactics and ethics of a hacker to break into the iPod.”¹²

Apple issued its angry statement just four days after RealNetworks started giving away software called Harmony that lets people download songs from its online music store ³and play them on Apple’s popular iPod portable music players, as well as players using Windows Media Playe⁴r and RealNetworks’ Helix formats.⁵

RealNetworks quickly shot back its own strongly worded response, vowing to continue letting consumers play songs bought on its music service on ⁶any of the 70 music players on the market, including Apple’s iPod.⁷

“Consumers, and not Apple, should be the ones choosing what music goes on their iPod,” executives o⁸f RealNetworks said in a statement. “Harmony follows in a well-established tradition of fully legal, independently developed paths to achieve compatibility.”⁹

While RealNetworks is the first company besides Apple to sell songs in the protected iPod format, other ¹⁰companies sell them in the MP3 format, which the player can also use.¹¹¹²

RealNetworks defended its legal position, comparing its development of Harmony to past efforts by companies to make their products compatible with those of competitors.¹³¹⁴

“There¹⁵ is ample and c¹⁶lear $P\log/employment$ for us and precedents.”¹⁷

precedent for this activity, for instance, the first IBM-compatible PCs from Compaq,” the statement said.¹⁸

Apple said it was investigating whether RealNetworks’ move violated the Digital Millennium Copyright Act or other intellectual property laws. RealNetworks resp¹⁹onded that the copyright act, passed in 1998 to address the issues surrounding the distribution of digital content, explicitly permits the development of software that can share ²⁰data wi²¹th programs and from other companies.²²²³

Apple also warned that Harmony may not work with future versions of the iPod software.

Robert Glaser, the chief executi²⁸ve of RealNetworks, has long bee²⁹n a critic of what he sees as Apple’s proprietary strategy with the iPod, asserting that Apple was running the risk of fol³⁰lowing the same path it took in its development of its personal compu³¹ter.³²³³

For his part, Glaser has tried to act as something of a neutral party in the competition among different hardware standards. Glaser said last week that he had sent an e-mail message to Steven P. Jobs, chief executive of Apple,³⁴ in April,³⁵ asking him to license Apple’s music format to RealNetworks, but, he said, Jobs did not reply.³⁶³⁷

Glaser, along with many industry analysts, asserts that RealNetworks’ software could ultimately lead to more sales of iPods.³⁸³⁹

RealNetworks showed no sign on Thursday of backing⁴⁰ down, despite⁴¹ Apple’s legal threat. “We remain fully committed to Harmony and to giving millions of consumers who own portable music devices, including the Apple iPod, choice and compatibility,” RealNetworks said.

Apple accuses RealNetworks of 'hacker tactics'

MAYWONG

SAN JOSE (CALIFORNIA) 30 JULY

Apple Computer on Thursday responded to RealNetworks’ creation of iPod-compatible software by calling it the technological equivalent of breaking and entering. “We are stunned that RealNetworks has adopted the tactics and ethic⁴²s of a hacker to break in⁴³to the iPod, and we are investigating the legal implications of their actions,” Apple said.⁴⁴

Seattle-based RealNetworks announced over the weekend that it had developed software that allows songs purchased from its online m⁴⁵usic store to transfer to Apple’s iPod.

The new system gets around internal copy-protection armour of the iPod that limits the popular portable music player to songs downloaded directly from Apple’s iTunes Music Store or songs converted into the generic MP3 music format.⁴⁶⁴⁷

Apple did not return previous phone calls seeking comment on RealNetworks’ move. But Thursday’s caustic reply suggested ⁴⁸Apple was pr⁴⁹epared to zealously guard its iPod franchise. It warned Real’s efforts to expand sales by tapping into the iPod would likely be shortlived.

“When we update our iPod software, it is highly likely that Real’s Harmony will cease to work with current and future iPods,” Apple said. RealNetworks said the Harmony technology “follows in a well-established tradition of fully legal, independently developed paths to achieve compatibility.” It is designed, the company says, to be compatible with a number of different copy-protection systems.⁵⁰⁵¹

Apple uses a protection scheme ⁵²called FairPlay to make songs purchased from its iTunes store tran⁵³sferrable only to the iPod. – AP

RealNetworks Software For iPod Portable Devices

SAUL HANSELL

29-07-04

RealNetworks Inc, the maker of media-playing software, has grown tired of waiting for Apple Computer Inc to share.

On Tuesday, without Apple’s authorisation, RealNetworks will start to give away software that will allow people to buy and download songs from its online music store and then play them on Apple’s popular iPod portable devices, in addition to those that use the Windows Media Player format and RealNetworks’ Helix ⁵⁴format.⁵⁵⁵⁶

This will be the first time any company other than Apple has sold songs for the iPod. While Microsoft Corp has freely licensed the Windows format to various⁵⁷ music stores and makers of portable players, Apple has kept i⁵⁸ts business proprietary. This has helped Apple keep the dominant market share both for online music stores and⁵⁹ portable players with hard drives, the more lucrative half of the play⁶⁰er market.⁶¹

In April, Robert D Glaser, the chief executive of RealNetworks, sent an E-mail message to his counterpart at Apple, Steven P Jobs, asking him to licens⁶²e Apple’s format. Jobs never replied, Glaser said last week.⁶³⁶⁴

So RealNetworks created technology that can create files to be read by iPods. Glaser declined to say how it did this. But Josh Bernoff, an analyst with Forrester Research, said that RealNetworks used a technique known as reverse engine⁶⁵ering - observing how ⁶⁶Apple’s software behaved as it encoded songs to be loaded onto iPods.

An Apple spokesman, Liz Einbinder, said Apple had no comment on the plans of RealNetworks.

Glaser said his company was not violating any of Apple’s intellectual property rights. Bernoff said that was not clear, and Apple might choose to assert that its patents were being violated. He added that Apple certainly could change its encryption scheme so RealNetworks’ software would no longer be able to load songs on the iPod. But this would force eve⁶⁷ry iPod owner to download new software.⁶⁸⁶⁹⁷⁰

“Apple has basically locked in their users,” Bernoff said. “We are not used to think⁷¹ing of Apple as the monopolist, but in this market they are.”⁷²⁷³

When users buy songs from RealNetworks, they are downloaded to their hard dri⁷⁴ve in a format that RealNetworks controls.⁷⁵

Using the co⁷⁶mpany’s new software called Harmony that is being introduced in a test version on Tuesday, the songs can be copied on up to five portable devices – including those from Apple, Creative, Rio, Samsung and others.

“Our v⁷⁹iew is that if you buy a song,⁸⁰ you aren’t buying it for that day or that month,” Glaser said. “You are buying it because you are buying it.” He added that he thought that RealNetworks’ software would help Apple fend off a coming attack from Microsoft because it allowed customers to use an iPod today while preserving their option to use a device with the Windows format later.

“⁸⁹A long time from now,” he said, “people will look back at our announcement and say it was a great benefit for Apple.” For now, RealNet⁹⁰works is selling songs at 99 cents each, the same price as Apple. But in the future, it will use the same techn⁹¹ology in its Rhapsody music service, which sells songs for 79 cents each. It may also license the technology to other companies. Rh⁹²apsody has 550,000 subscribers, mostly paying about $10 a month.

Bernoff said this technology might give a⁹⁷ temporary advantage to RealNetworks’ music store, which has a very small share of the market so far. But he said he thinks Microsoft will als⁹⁸o find a way to sell songs to be downloaded on iPods. Microsoft plans to introduce its own online music store soon that will be promoted ⁹⁹on its Windows Media Player¹⁰⁰ and MSN online service. Bernoff said he expected Microsoft quickly to become the No 2 download service behind Apple.¹⁰¹

Microsoft could make some money selling songs, and it receives license revenu¹⁰²e from makers of players that use its software. But the most important goal for Microsoft is to make sure its formats become the industry standard for legal music downloads and other forms of media.¹⁰³¹⁰⁴

RealNetworks tried to win a¹⁰⁵cceptance for its formats, Bernoff said¹⁰⁶, but its music it has failed. “The most important battle is between Apple and Microsoft,” he said.

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My notes

02-08-2004

RealNetworks “asked for a license from Apple but went ahead with development when there was no response from Apple.

Obviously lawyers of RealNetworks must have examined the legal implications before allowing its Management to “go ahead”.

$\triangleright$

Why did Apple make iPOD incompatible with songs downloaded from other Music sites?

Ans

To create its monopoly, because, if songs downloaded from other Music Sites can also play on iPOD, then there is a real

danger that Record Companies A/B/C may get tempted to tie-up with these other Music sites! - especially, if those other music-sites offer them a better deal as compared to Apple.

But since this is not possible, Record Companies have no choice except to tie-up with Apple ONLY! - or lose revenue.

In 15 months, iTunes sold 100 million songs @ 99 cents each. That is $99 million ($\approx$ $6.5$ million/month). I believe Apple shares 15c - 20c (from 99 cents) with its “content-providers” i.e. the Record Label Companies.

Why not, other Music sites follow Apple’s example and develop/manu-facture/market their own proprietary MP-3 players, compatible with their own music-sites?

Ans

Music sites are themselves Virtual web webstores, selling (download) digital content (i.e. Music) - and have no expertise, what-so-ever, in developing/manufacturing/mktg. a HARDWARE. It is not their “core-competence” and, if they tried, they would fail miserably!

Apple heavily subsidizes iPod sales, from its iTunes revenue. So to have to “play” other music-sites too, would have to “play” the game by Apple’s “rules”! They just cannot hope to play – and win – by Apple’s “rules”!

Apple can suddenly drop 99 cents to 49 cents!

Record Label Companies, having already tied-up with Apple, would think twice before also tying-up with other music-sites - who, in any case, are not in a position to offer them a better deal than Apple! So, why take risk?

Q: What is RealNetworks trying to achieve?

Ans: Break Apple’s stranglehold - which Apple has acquired by making iPOD “incompatible” with songs downloaded from any other music-site.

[ Here, there is a parallel with our Image Builder Resume. We are planning

free downloading of ImageBuilder by individual jobseekers. We are encouraging them to only use the downloaded ImageBuilder, whenever they apply in future, anywhere

to flood the mailboxes of HR mgrs with ImageBuilders which they will receive under WWJ/JAM Service

to permit/enable HR managers to upload ImageBuilders received by them, on https://www.google.com/search?q=Recruitguru.com, free of cost, & create their own, private/secure Resume Database.

Then we will “charge” Corporates for

Searching & Shortlisting of ImageBuilders on https://www.google.com/search?q=Recruitguru.com.

Image Builders are “Searchable” on only Recruitguru – especially # searching by “Percentile-score” of “function”.

It would be extremely difficult for an HR manager to search ImageBuilders lying in thousands on his local harddisk!

Our longterm objective

To use WWJ/JAM to make money from Candidates

To use https://www.google.com/search?q=Recruitguru.com to make money from Corporates

This is possible when we succeed in withdrawing from the recruitment market the OLD CURRENCY (plain text resumes) and Substitute with the NEW CURRENCY (ImageBuilder).

Software Searches Without Being Asked

HIAWATHA BRAY

21-07-04

Ask and you shall find, says the Bible, as do Google, our favorite Internet search service. But must we always be asking? Why not have our computers find things of interest before we ask, like a well-trained puppy delivering the morning slippers?

A team of entrepreneurs have unveiled a smart software that purports to do exactly that, and promises relief. Blinkx, doesn't quite live up to its billing, but still has merit. The tiny Blinkx video provides a painless introduction to a way of finding data that we may all be using soon. Blinkx is available as a free download (at www.blinkx.com) It runs only on Windows 2000 and Windows XP computers, though its makers plan to offer versions for older editions of Windows and for Apple Macintosh computers.

Blinkx scans all the software, creates an index of the files on your computer, a kind of candy feature which alone might justify the program's existence.

The existence of the index is just the beginning. Once Blinkx is running, every time you open Internet Explorer, a Web browser that Blinkx also supervises (as it does Opera or Mozilla), then visit any old website you get a flashing light next to the Web page's Democratic convention.

Next, look at the upper right corner of the screen. You'll see a tiny toolbar with a few icons, and you’ll notice a changing color from light blue to dark, then light again. This blinking effect means the Blinkx software has done its work. Without your knowledge, the program has examined the words on your Web browser's home page and run them through an algorithm that tries to figure out what you're reading about. If it thinks it can find something deemed relevant and submits the information to Blinkx's online service.

The search doesn't stop there. Blinkx riffle through Web sites. It remember the index of your files, and then while the Web browser checks that index to see if you have any files that relate to subjects on the page. Click on the Blinkx light, and you'll see a pop-up preview of your files, on your Key and hit party, click the preview to see the entire file.

Next comes a news icon. Blinkx has scoured several online news services for articles related to the convention.

Software Searches Without Being Asked

Of course, it's also done a general Web search, and you can see the results by clicking the third icon.

In the Blinkx business plan works out, companies will pay to advertise their products and services through sponsored filters that will be displayed separately from regular search results.

But Blinkx doesn't work just when you're browsing. You can set it up to monitor your e-mail messages (with Microsoft Outlook or Outlook Express, and with text files in Microsoft Word).

The Microsoft-centric design of Blinkx may limit the company in a few years, because Microsoft engineers are hard at work on adding similar features to their own software. Microsoft calls it "implicit query" the idea that a computer should implicitly recognize what matters to the user, without having to be told, and use that to prioritize and fetch relevant data. It's one of the main concepts Microsoft’s research labs is honing in hopes of putting it into the next version of the Windows operating system, which is codenamed "Longhorn."

That's a long way off, giving a startup like Blinkx a foothold in the market, and to make some badly needed improvements to its software. Still, it's good to have a piece of software that peers over your shoulder, pointing out interesting things that you would have noticed if you'd spent some extra time with online searching. Blinkx may be the thing you haven't been looking for.

Note sent to Abhir (21-07-04)