Real admits risk of Apple lawsuit

Posted:
in iPod + iTunes + AppleTV edited January 2014
Real Network's decision to allow tracks purchased from its Rhapsody music service to play on iPods through a software hack called Harmony puts it at risk to a lawsuit from Apple, the company said this week.



As noted by Macworld UK, Real in its latest Q10 filing with the Securities and Exchange Commission warned investors: "If Apple decides to commence litigation against us in order to prevent interoperation with its products, we may be forced to spend money defending their legal challenge, which could harm our operating results."



In developing Harmony, RealNetworks reverse engineered a way to translate tracks downloaded in its proprietary Helix DRM scheme to an equivalent of Apple's FairPlay DRM, allowing millions of iPod and iTunes users to alternatively shop at its Rhapsody music service.



"Our Harmony technology enables consumers to securely transfer purchased music to digital music devices, including certain versions of the market leading iPod line of digital music players made by Apple Computer, as well as certain devices that use Microsoft Windows Media DRM," the company said.



Real also admitted there are additional risks associated with Harmony, "including the risk that Apple will continue to modify its technology to ?break? the interoperability that Harmony provides to consumers, which Apple has done in connection with the release of certain new products. If Apple chooses to continue this course of action, Harmony may no longer work with Apple?s products, which could harm our business and reputation, or we may be forced to incur additional development costs to refine Harmony to make it interoperate again."



Apple last year openly expressed its frustration with Real's Harmony hack in a public statement, saying: "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 DMCA and other laws. We strongly caution Real and their customers that when we update our iPod software from time to time it is highly likely that Real's Harmony technology will cease to work with current and future iPods."



In the SEC filing, Real further admits that while it believes its Harmony technology is legal, "there is no assurance that a court would agree with our position."



Real this week also said it expects to spend $16 million this year fighting Microsoft, which it sued in 2003, accusing the software giant of using its market dominance in operating systems to promote its rival Windows Media Player software.
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Comments

  • Reply 1 of 31
    aquaticaquatic Posts: 5,602member
    Why the shit does Apple block Harmony et al!!!!????? I thought they did NOT profit on the iTMS, but the iPods, as usual, since they are a "hardware company."
  • Reply 2 of 31
    rokrok Posts: 3,519member
    Quote:

    If Apple chooses to continue this course of action, Harmony may no longer work with Apple?s products, which could harm our business and reputation, or we may be forced to incur additional development costs to refine Harmony to make it interoperate again.



    isn't this almost verbatim what apple warned about when real first released harmony?
  • Reply 3 of 31
    I hate Real and their shitty, shitty products, but I do think it would be good for the iPod to accept other DRM schemes like Helix and Janus. Doing that would sell more iPods because customers wouldn't have to buy a Creative/Rio player to use services like Napster, Yahoo, etc.



    More iPods sold would eventually mean more tracks sold at the iTMS, anyway, since users would still be using iTunes to load their iPods.



    Edit: Real's reverse-engineering of FairPlay is pretty shady, though, for a mainstream company. It's cool when it comes from the users (i.e. Hymn), but not from competitors.
  • Reply 4 of 31
    hirohiro Posts: 2,663member
    Quote:

    Originally posted by Aquatic

    Why the shit does Apple block Harmony et al!!!!????? I thought they did NOT profit on the iTMS, but the iPods, as usual, since they are a "hardware company."



    Harmony is a honeypot that can also support other MP3 players. It would likely die the same death as most other legal download sites without iPod support. So if it cannot survive without iPod support, it indirectly reduces potential iPod hardware competition by making it less easy to buy legal tracks for non-iPod players.
  • Reply 5 of 31
    melgrossmelgross Posts: 32,959member
    Quote:

    Originally posted by Aquatic

    Why the shit does Apple block Harmony et al!!!!????? I thought they did NOT profit on the iTMS, but the iPods, as usual, since they are a "hardware company."



    If you follow the news and Apple's financial statements you would know that they do make a profit on iTunes sales. Not a large one, but a profit nevertheless.



    Even if Apple only broke even, anything that would lessen the sales would lessen Apple's chance to do better. Apple is most likely the only company making a profit on song sales because of their volume. The others make some profit on their subscriptions but not on song sales.



    It's also questionable as to whether what Real is doing is legal. The DCMA allows reverse engineering to make a product compatible, but it doesn't allow it for the purpose of circumventing a DRM. Those two things are incompatible.



    Another example is that while you are allowed to make a copy of something for a backup, if you own or license it, you are not allowed to break the DRM to do it. It's already been ruled at least once that the DRM takes precedence.
  • Reply 6 of 31
    If they really have balls they should sell un-DRMed mp3 or aac, that'll work with the ipod allright, no need to reverse engineer shit.
  • Reply 7 of 31
    melgrossmelgross Posts: 32,959member
    Quote:

    Originally posted by bobbagum

    If they really have balls they should sell un-DRMed mp3 or aac, that'll work with the ipod allright, no need to reverse engineer shit.



    You should know better than that. It's not a matter of balls. It's a matter of them being able to sell anything other than unknown bands or a few indie labels.



    When the law is clear cut, there is no point in flouting it. They would be out of business in a week. This isn't an illegal Russian site.
  • Reply 8 of 31
    louzerlouzer Posts: 1,054member
    Quote:

    Originally posted by Aquatic

    Why the shit does Apple block Harmony et al!!!!????? I thought they did NOT profit on the iTMS, but the iPods, as usual, since they are a "hardware company."



    Yeah, but its apple's MO. They like to control the whole thing, not just a piece of it. Why else do you think they're making their own scroll wheel for the ipod, instead of using the one from a third-party? And people talk about how OS X is so good and compatible with Mac hardware because Apple makes the whole widget.



    Apple wants you to buy an iPod from them, use itunes to buy music from them, then use iTunes to install music onto said iPod. By controlling it all, they keep all the money. If they added support for Real and MS formats, then they lose profit, plus increase support costs (esp. when MS starts adding new features that they need to support and all).



    And right now, with Apple having such large shares of both markets, they can act indifferent to the others, as well as ignore the calls for more features (and fix what some would call the glaring holes/bugs) for the iPod. For example, the iPod still reportedly has issues skipping some songs. And you still can't after 4 generations, play any music skipless, even though you can in iTunes (so don't be spouting the "MP3 files always have some space at the front/back" crap, since if it works in iTunes, then it apparently must not be there for that music! And its not because they're loading the next song from disk, because my iPod loads from disk some 30 seconds before the song ends.)
  • Reply 9 of 31
    Quote:

    Originally posted by Louzer

    Yeah, but its apple's MO. They like to control the whole thing, not just a piece of it. Why else do you think they're making their own scroll wheel for the ipod, instead of using the one from a third-party? And people talk about how OS X is so good and compatible with Mac hardware because Apple makes the whole widget.



    Apple wants you to buy an iPod from them, use itunes to buy music from them, then use iTunes to install music onto said iPod. By controlling it all, they keep all the money. If they added support for Real and MS formats, then they lose profit, plus increase support costs (esp. when MS starts adding new features that they need to support and all).




    And this is bad in what way? Think of it this way. If you had a product wouldn't you want to make money off of it? If other people were hacking into your work would it be right? If you weren't happy with how a person was contributing to your product, you knew you could do it better, wouldn't you do that? And this could go for anything from electronics to publishing and or automotive. And in the end yeah you would make more money off of it. I can't understand how this bad unless they've personally scorned you in some way.



    Don't get me wrong. I know it's a money thing, and I know Apple isn't a saintly company but I've used other services and they're crap compared to iTMS. I own an iPod 4G and I'm happy with it.



    Hell my own ISP doesn't even support Mac with their music service and even trying to trouble shoot my Airport Express. (comcast)



    I was a PC user up until 3 or so years ago. Give or take. Do you know why? Because all of apple's hardware, and software just works. I got that Airport talking to my mac in under 5 mins. The problem was my ISP's cable modem. The apple tec who originally installed it had no idea even what a mac looked like let alone trying to figure out where to plug the jack in. I did the install too and I got the fee waved (I did ask for a mac tech). I could go on and on.



    So if they want to corner the market with service and products that work. Well I can't see how that's a problem. I've had problems but I could count them on one hand as opposed to having my PC crash every half hour or so wth a modem you had to reboot daily. No thanks.
  • Reply 10 of 31
    As far as I'm concerned Real can go take a running jump anyway. For a company that seems to update its software every few months you would have thought by now that they could get it to work properly. I have never had a good user experience with RealPlayer. Even Windows Media Player is better than RealPlayer and thats saying something. How Real can see itself as a future player with such shoddy software I don't know. Flash and Shockwave plug-ins just work and make the whole media experience seemless, RealPlayer always seems to get in my way when I use it rather than just work as a technology. I only use it cause I have to, when given the choice though I'll go for the WMP streaming option everytime. Wish Quicktime could get a better hold in the streaming markets.
  • Reply 11 of 31
    Apple has every right to protect their intellectual property. They invested a hell of a lot of money to bring the iPod, iTunes and the iTunes Store to the market. It's their property and I would have no problem if they made Real pay a few legal bills over the situation.



    Now that the iTunes Store is making a bit of a profit Apple can add part of that profit into continual development of the iPod/iTunes division. We are starting to see some of the benefits in the latest version of iTunes and there is sure to be more to come. Fact is that the more profit Apple makes the more they will release new products (hardware and software) that we'll be drooling over.
  • Reply 12 of 31
    Good idea Real... tell Apple to sue you and now you probably will get sued.
  • Reply 13 of 31
    Quote:

    Originally posted by w_parietti22

    Good idea Real... tell Apple to sue you and now you probably will get sued.



    This is actually a good move on Real's part. If they get it out into the world first and spin it the way that they want, which people hear first, they might position it in such a way to make Apple look bad if they do sue them.



    Something like the big bad machine taking down the little old sound company.
  • Reply 14 of 31
    aquamacaquamac Posts: 585member
    Quote:

    Originally posted by kwsanders

    This is actually a good move on Real's part. If they get it out into the world first and spin it the way that they want, which people hear first, they might position it in such a way to make Apple look bad if they do sue them.

    Something like the big bad machine taking down the little old sound company.




    Since Apple only has 4% of the market there hardly the big bad company.
  • Reply 15 of 31
    melgrossmelgross Posts: 32,959member
    You know, it's all really very sad about Real.



    Many of you may not be old enough to remember, but Real was first with streaming. Real Music was available in the dawn of the internet. Even though dial-up would cause the stream to go to lower bit-rates and sound bad, or distorted, or to even stop for a while, it was exciting at the time. The high quality version was 64Kb/sec. I got that with my ISDN connection where it worked very well. With dial-up you could get 32Kb/sec.



    RealVideo was also one of the first. At one time it was thought that Apple might buy Real, but as usual, they went their own way.
  • Reply 16 of 31
    Quote:

    Originally posted by kwsanders

    This is actually a good move on Real's part. If they get it out into the world first and spin it the way that they want, which people hear first, they might position it in such a way to make Apple look bad if they do sue them.



    Something like the big bad machine taking down the little old sound company.




    Well, really this is a required disclosure in their SEC filings. Real has to report all litigation - pending and highly foreseeable - that would have a material effect. Since Apple has maade threats with respect to Harmony, Real has to report this information and the possible impact such litigation could have on Real.



    Aside from which, reading the text of Real's disclosure, it hardly sounds like spin to make Apple look bad. The attempt to make Apple look bad came last year when Real did it's whole Harmony marketing campaign...
  • Reply 17 of 31
    melgrossmelgross Posts: 32,959member
    Quote:

    Originally posted by AquaMac

    Since Apple only has 4% of the market there hardly the big bad company.



    As a $13 billion company vs. a $500 million company they are.



    As a company with 82% of music download sales in this country vs. 5% of sales they are.
  • Reply 18 of 31
    Quote:

    Originally posted by AquaMac

    Since Apple only has 4% of the market there hardly the big bad company.



    4% of the computer market share. but not the digital music player market share and music sales.
  • Reply 19 of 31
    Quote:

    Originally posted by AquaMac

    Since Apple only has 4% of the market there hardly the big bad company.



    Apple might only have 4% of the computer market, but they have a much larger share of the portable music player market. You missed my point entirely.
  • Reply 20 of 31
    kolchakkolchak Posts: 1,398member
    It wouldn't be any skin off my nose if Real were to go belly up. Then maybe content creators would get wise and select a streaming media format that's actually good, namely Quicktime.
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