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RealNetworks sings Apple's tune

Company seeks iTunes partnership to challenge Microsoft

RealNetworks’ chairman and chief executive officer Rob Glaser has urged Apple Computer's CEO Steve Jobs to partner its digital music businesses against rival Microsoft, according to a report published Thursday in The New York Times online edition.

The report states that in an email sent on 9 April, Glaser offered to create a "tactical alliance" with Jobs and Apple – citing a message obtained by The New York Times "from a person close to Apple."

Should Apple in Cupertino, California and RealNetworks in Seattle, Washington be unable to reach an agreement, RealNetworks may turn to Microsoft to pursue "very interesting opportunities," the report quotes Glaser as writing.

On Thursday a RealNetworks spokesperson at the company's headquarters confirmed that Glaser sent an e-mail message to his counterpart at Apple, but stated that the message was intended to be private. Apple representatives did not return calls requesting comment. A spokesperson for Microsoft in Europe says he is unaware of the report.

An alliance between RealNetworks and Microsoft would be a dramatic change in the nature of relations between the two companies. RealNetworks has long lobbied against Microsoft's market dominance and currently has a private lawsuit lodged against Microsoft in the US accusing the company of using its monopoly powers to control the digital media market with its windows media player to the detriment of Real's competing player.

However, given that Apple is currently the digital music market leader with its iTunes online music store, Glaser would like see RealNetworks license Apple's ‘fairplay’ digital rights management system in exchange for making Apple's popular iPod music player the primary device for the RealNetworks store and for the RealPlayer software.

Though RealNetworks' encrypted music services, Rhapsody and the Real music store both support AAC – the digital music technology standard favoured by Apple – the services cannot currently be played over an iPod. Glaser is quoted as stating that the limitation may force RealNetworks to switch to Microsoft's competing WMA format

He added, however – “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."

Glaser has repeatedly criticised Apple for locking down the iPod player so it only plays Apple's own ‘Fairplay’ secured music technology and not formats used by competing online music stores.

"We have consistently stated that Apple should open the iPod and Rob [Glaser] recently communicated that directly to Steve [Jobs]," said Greg Chiemingo, a RealNetworks spokesperson.

"The digital music market is very good and everybody is very excited about it. However, we're still very early in this market, and in order for the market to really take off, consumers should expect that if they buy songs in any legal online store they will be able to play it on any device," he added.

Glaser has not received a response from Jobs and it is unlikely Apple would agree to Glaser's proposals, the report states.

If the two companies were to come to a deal it would probably be very narrow and mostly benefit RealNetworks, says Richard Doherty, research director at The Envisioneering Group in New York City.

Doherty said that Apple and RealNetworks have taken different approaches to the digital music market. RealNetworks' model is subscriptions: it sees its music store as a front door for the Rhapsody subscription service, while Apple concentrates on music sales through iTunes.

Microsoft so far has been the sleeping giant in the online music space. Although Windows Media technology has been used for several music services, the fight for consumers among Microsoft, Apple and RealNetworks is likely to become much more heated after Microsoft launches its MSN music store later this year.


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