RealNetworks Confirms Talks to License Harmony

An executive of RealNetworks, Inc. has admitted that the company is in talks to license itis Harmony digital music software, which lets users of Realis digital-music service play their downloads on a number of portable devices, including Appleis iPod.

In an interview with CNN/Money reporter Eric Hellweg, Real chief strategy officer Richard Wolpert said, "We havenit announced [Harmony licensing plans], but weire in discussions and happy to be in discussions with people. Letis grow the industry."

On Monday, RealNetworks announced Harmony - a technology that breaks through Appleis technology using reverse engineering to gain the ability to play its music files on an iPod. RealNetworks did not seek permission from Apple before releasing the software.

Until now, other companies have been unable to offer people the ability to buy music from their service and play it on the popular iPod, which is the best selling portable music device in the world. Apple has blocked that ability by refusing to license the use of its FairPlay DRM to companies seeking iPod compatibility.

Songs bought through the iTunes Music Store are encrypted using FairPlay, which works only with the iPod. In addition, the iPod doesnit support DRM technologies used by other services, like Windows Media Audio and RealNetworksi Helix technology.

Mr. Hellweg theorizes that Apple is on the cusp of having to make a tough decision on changing its mind and licensing Fairplay, or risk having companies like RealNetworks find legal ways around allowing people to buy music through other online music services and legally play their files on the iPod.

"Apple may yet decide to challenge Harmony in court, but it should carefully think through the consequences: Harmony may actually prove beneficial to Apple and the industry as a whole....The question the company now must answer is, Is it strategically more important to preserve its closed system, or is the iPod the future profit machine for the company? In the latter case, it should pump up sales numbers at any reasonable cost. Itis quite a pickle