RealNetworks seeks musical alliance with Apple...
NYTIMES (Reg req: appleinsider/appleinsider)
This is big. I haven't seen the news elsewhere yet. I think it's a NYTIMES scoop.
This is big. I haven't seen the news elsewhere yet. I think it's a NYTIMES scoop.
Quote:
It is against this backdrop that the timing and details of Mr. Glaser's offer to Mr. Jobs are particularly intriguing. In his message, which was obtained by The New York Times from a person close to Apple, Mr. Glaser asked Mr. Jobs to consider licensing Apple's Fairplay digital rights management system to RealNetworks to permit customers of the RealNetworks music service to play their digital music collections on iPod players.
In exchange, RealNetworks would make the iPod its primary device for the RealNetworks store and for the RealPlayer software.
It is against this backdrop that the timing and details of Mr. Glaser's offer to Mr. Jobs are particularly intriguing. In his message, which was obtained by The New York Times from a person close to Apple, Mr. Glaser asked Mr. Jobs to consider licensing Apple's Fairplay digital rights management system to RealNetworks to permit customers of the RealNetworks music service to play their digital music collections on iPod players.
In exchange, RealNetworks would make the iPod its primary device for the RealNetworks store and for the RealPlayer software.
Comments
Mr. Glaser asked Mr. Jobs to consider licensing Apple's Fairplay digital rights management system to RealNetworks to permit customers of the RealNetworks music service to play their digital music collections on iPod players.
In exchange, RealNetworks would make the iPod its primary device for the RealNetworks store and for the RealPlayer software.
This would indeed be A Big Deal, and a great chance for both parties to Stick It To Bill.
Barto
The reality is that Real is already on-board with AAC, and have as much of a disliking for Gates and Co as Apple do.
In my opinion, it would be far better to bring them on as an ally, than to push them over to Windows Media. As you said, they are not making money, and find themselves caught in the middle of a brewing storm--Apple would be fools to not offer them cover.
I think that how this plays out will dictate--to an extent--the outcome of the music format wars. It is time for Apple to swallow its pride, and open this thing up to select partners; HP and Real would be a formidable pantheon of allies.
Hopefully Apple see this...
but its down to steve. and steve doesn't like being told what to do...
I cross my fingers Apple wont repeat the clone mistake of the 80is. Swallow your pride, Steve Jobs!
They say that their iTunes store is not there to make a profit but to sell iPods. Wouldn't other stores also selling music in that format simply increase the sale of iPods?
Until I figure out why licensing FairPlay is a bad thing, I don't see why aligning with Real would hurt Apple.
And now this. To paraphrase: Join with us or we'll have to go to the Dark Side. (Glaser is a former MS employee, natch).
Here's a solution: Apple eats Real Networks. Real has several media deals and Apple has tact and taste (and a future). A 12 month phase in/phase out of Realplayer to Quicktime and it's done.
Screed
While I see what the benefits would be if they licensed Fairplay (it would be great to have a de facto standard for this, especially the one Apple has), I don't see the great incentive for Apple from a business point of view, not yet, anyway. Perhaps if Apple is feeling heat from MS and Sony, they owuld license it to prevent them from gaining much momentum now. Glaser is probably banking on that threat, that hoping Apple has that on their minds. But there's more Real can bring to the table: the online content and partners available to Real, or giving QT the keys to Real content to a fair extent.
Originally posted by BuonRotto
The politics of this are most intriguing. Why would Glaser go public with this proposal first, before even apparently approaching Apple? It's more about PR than about any real dealmaking. He's trying to paint Apple a certain way preemptively, or rather frame the issue so he can do that when it falls through. The terms seem pretty limited considering what Real can really offer Apple in exchange, and the veiled threat about cozying up to MS is a perfectly transparent attempt at carrot-and-stick.
Wasnt there a leak from Apple, and then New York Times asked Glaser about this??
Originally posted by BuonRotto
While I see what the benefits would be if they licensed Fairplay (it would be great to have a de facto standard for this, especially the one Apple has), I don't see the great incentive for Apple from a business point of view, not yet, anyway. Perhaps if Apple is feeling heat from MS and Sony, they owuld license it to prevent them from gaining much momentum now. Glaser is probably banking on that threat, that hoping Apple has that on their minds. But there's more Real can bring to the table: the online content and partners available to Real, or giving QT the keys to Real content to a fair extent.
RNWK actually got some momentium:
http://biz.yahoo.com/prnews/040415/sfth077_1.html
"SEATTLE, April 15 /PRNewswire-FirstCall/ -- RealNetworks® (Nasdaq: RNWK - News), the leading creator of digital media services and software, today announced that it added 100,000 paying subscribers for its premium digital music services during the company's fiscal first quarter (ended March 31, 2004), pushing the total subscription count for its music services beyond 450,000. This is the second consecutive quarter the company has added 100,000 subscribers for its digital music services, including Rhapsody and RadioPass. Overall, the subscriber base for these services has grown by 80% since the end of Q3 2003.
ADVERTISEMENT
RealNetworks also announced that usage of the industry-leading Rhapsody Internet jukebox service increased again in March, when subscribers streamed more than 56 million songs on-demand -- a rate of more than 1.8 million songs a day, and an increase of more than 16% over usage during February. This is the tenth consecutive month of double-digit growth in consumer usage of Rhapsody. The announcements reinforce RealNetworks'
"
Like it or not, Real is really delivering a huge amount of content.
Originally posted by blabla
Wasnt there a leak from Apple, and then New York Times asked Glaser about this??
Yep, and Glaser was only too happy to share with the NYT.
Originally posted by MacsRGood4U
When M$ enters the fray it would be much more advantageous for Apple to simply "turn on" the WMA capability of the iPod with a software update.
I disagree. Apple is trying to be an alternative to Microsoft and WMA. Otherwise Apple would have done this already. The only way to do that is to establish it as THE standard. By turning on WMA, Apple will almost instantly kill AAC and Fairplay.
Originally posted by blabla
its naive to believe a proprietary DRM scheme could conquire the whole world. Sooner or later some kind of a DRM "standard" will emerge, and I suspect it will be from Microsoft.
First, neither DRM scheme is a "standard" in the open standards sense of the word. However, Apple is trying to make AAC+Fairplay the defacto standard (which is another kind of standard). If they succeed (and so far they are with regard to digital downloadable music). They can play the same role that Microsoft currently plays in operating systems.
Originally posted by David R
I guess I never understood Apple's stance on not licensing FairPlay to any other companies.
Who is to say they weren't going to, but were planning the right timing for such a move.
Originally posted by Aquatic
MS will crush anyone and anything and anyone who thinks differently is wrong.
This is certainly the prevailing wisdom, but I am trying to figure out how this will happen. There are a few things to consider before arriving at this conclusion.
First, MS has NOT crushed everyone at everything. They are currently failing (quite badly) with the XBox for example. They have never overtaken Quicken. MSN is still an also-ran. DESPITE MS's ability to lose money for YEARS on these ventures. (That, BTW is the problem with monopolies).
Second, I think that Apple has set this game up fairly well. First, they set a market price for music that was a) acceptable to consumers, and b) unprofitable for music (only) stores. Which means that there is almost NO way that any of the WMA music stores can make money, because they are only selling music and the market price that Apple set is too low for anyone (except the music companies) to make any money. Okay, so where do you make money? The hardware. Great, plenty of iPod competitors out there, but a) they mostly suck, b) most (70%) people are STILL buying the iPod, and c) none of them work with the #1 music download service (iTMS). Hmmm. So, now we come to MS. Sure, MS can open a MS Music store...and operate it at a loss for a long time. But where are THEY going to make money? They want to make money licensing WMA...which they can do by licensing to hardware companies. Because they'll piss off (and torpedo) all WMA music stores by this move. Finally, if they start undercutting Apple (at a loss mind you) they are likely to raise the attention of the Justice Department. This is a trickier game for MS to navigate than it looks like at first.
Apple still needs to be deft and wise in its moves.
I think this Real deal could be the second step (HP was step #1). Open up the field of PERCEIVED choices (there are no REAL choices among the music stores, and probably never will be...they all have the same product at the same price, with the same features.) This could set the framework for other music stores to come on board with the "iTMS Compatible" label (the Good Housekeeping Seal of Approval for Downloadable Digital Music).
The next move is possibly doing private branding of iTMS.
The next move after that will take a little longer. After they have skimmed as much profit from the iPods as possible. And as the margins on digital music players begin to slide down (they are already). Let's say when Apple gets to the point where the margins are somewhere around $5-10/device. Then pull the next trigger...license FairPlay to other device makers for $5-10/device sold. Apple would still continue making iPods. Higher margin of course, for those who prefer Apple products. But now the field of "choices" has blown wide open...much of the high profit margin has been skimmed by Apple, and Apple is making $5-$10 for EVERY device sold whether it is from Apple or not.
This is the game plan as I see it playing out. If Apple is smart.
But remember...it will take time for this to happen. Apple wants to trying and get the higher margin business first. And as long as they are selling 70% of the digital music players, they have time to wait.