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Real Aims At Apple With Harmony Launch, Half-Price Promo

Real Aims At Apple With Harmony Launch, Half-Price Promo

by , 8:45 AM EDT, August 17th, 2004

RealNetworks Tuesday announced the Freedom of Choice campaign, ushering in iPod compatibility with its music store files by offering songs for 49 cents and most albums for $4.99 "for a limited time." With its eyes set on iPod owners who have been locked in to the iTunes Music Store, Real also launched a companion web site.

"To celebrate Freedom of Choice, we're running the biggest music sale in history," Rob Glaser, founder and CEO of RealNetworks said in a statement. "Thanks to RealPlayer with Harmony Technology, consumers can now buy digital songs and play them on virtually any device of their choice, just like how CDs and DVDs work. We believe Freedom of Choice is both the right thing for consumers and a crucial step in bringing digital delivery of music into the mainstream."

Harmony is Real's latest audio technology, providing compatibility with all digital music players, including the closed-system iPod. Real introduced Harmony in late July, touching off a spat with Apple, which days later accused Real of employing "hacker" tactics to circumvent iPod technologies.

The Freedom of Music Choice website promotes the campaign with advertisements for 49 cent downloads, an endorsement of Harmony from Public Knowledge, blogs with bitter sentiment for Apple, and a petition to "tell the [sic] Apple you want the right to choose where you get your music." Apple previously cautioned potential purchasers of Harmony tracks that future iPod software updates could break Harmony compatibility with the device.

A spokeswoman for Apple said Monday the company would have no immediate comment.

In the wake of the announcement, RealNetworks revised downward its third-quarter outlook, warning investors it expects to lose 3 to 5 cents per share as a result of the promotion. Analysts had anticipated losses of 1 to 3 cents per share for the quarter and believe the 49 cent downloads could cost the company about $2 million in lost revenue.

The Mac Observer Spin:

Provoking an 800-pound gorilla when the fate of your own success depends on it isn't always the smartest strategy. With Harmony, Real has achieved compatibility with iPods but Apple has clearly hinted that that compatibility could be short lived. While Real could always circumvent future blocks, it would only take one or two Harmony-blocking iPod updates to frustrate any Real customers into switching to the iTunes Music Store. Harmony could also end up being good for iTunes Music Store customers: while iTunes remains a more elegant solution for purchasing music, Real does offer AAC encoded songs at higher bitrates, which might prompt Apple to follow suit. Then again, re-encoding one million songs isn't exactly child's play. It will be very interesting to see how Apple responds to this one.

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