RealNetworks turns up the competitive volume

From...

By Dominic Gates

(IDG) -- RealNetworks is ratcheting up its digital media technology by two notches to compete even more aggressively with Microsoft for delivery of online content.

Two RealNetworks announcements were made Wednesday at the Streaming Media West conference in Long Beach, Calif. The venue may mask part of the subtext, which is that the Seattle-based, historical leader in streaming media is now moving smartly into the digital download business.

For the first time, it is providing a digital-rights-protection system for music and video downloads to its RealPlayer product. This will be the security technology for MusicNet, the online music subscription service from AOL Time Warner, Bertelsmann, EMI and RealNetworks scheduled for release later this year. (AOL Time Warner is the parent company of CNN.com.)

Additionally with backing from anti-Microsoft luminaries AOL, IBM, Sun and others RealNetworks is proposing an industry standard for the integration of digital rights protection technologies with e-commerce systems. It's a move that will favor the emergence of multiple vendors in the delivery of digital content, rather than one all-powerful player with a piece of the action on every level, such as RealNetworks' constant rival across Lake Washington.

"These are smart moves by Real," says Mark Mooradian, a senior analyst with Jupiter Media Matrix. "It's offensive defense."

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Mooradian cautions that as major music labels prepare to release their content online, with movie studios to follow later, the question of which digital rights management (DRM) technologies will prevail is still very much an open one.

"DRM adoption is in its infancy. There's basically zero penetration right now," warns Mooradian. Other technologies, such as IBM's, he says, could play an important role in the emerging world of digital media delivery. "It's premature to declare this race as dominated by either Microsoft or RealNetworks."

RealNetworks acquired the technology for its new DRM solution, called the RealSystem Media Commerce Suite, when it bought Aegisoft of Rockville, Md., in January. It will enable rights holders to securely distribute movies, music and other digital content to users of the RealPlayer media player. At launch, RealNetworks declared Sony Pictures Digital Entertainment a revenue-sharing partner. Microsoft's rival Windows Media Technologies has included a DRM system since 1999. However, the new RealNetworks system will gain some immediate traction with the launch of the MusicNet subscription service. It will be used to protect the rights of the record labels who provide the music.

The technology also will serve to strengthen the ties between Napster and RealNetworks. Provided Napster succeeds in allaying the fears of the music labels, it will be licensing the MusicNet service for release of major label music.

Separately, RealNetworks is promoting an open XML-based language as an industry-wide standard for Internet media commerce. The language, called eXtensible Media Commerce Language (XMCL), is a version of the increasingly ubiquitous XML data-exchange language. It's designed to act as a layer of communication between any DRM product-for example, RealNetworks' own new DRM solution or IBM's Electronic Music Management System-and back-end e-commerce products for customer management, financial management or transaction tracking.

The idea is that companies who sell content online can use a variety of e-commerce packages and/or rights protection systems and that all will interoperate via this common language standard.

"Implicitly, XMCL is a jab at Microsoft," says Mooradian of Jupiter Media Metrix. "Microsoft is about vertical solutions that touch every part of a business. This architecture allows users to swap out different DRM solutions and work with different commerce partners. It's a poke at the Microsoft business model."

Jeff Albertson, a RealNetworks product manager, says the company will submit a formal proposal to the W3C standards body within a month and will work with industry leaders to try to establish a widely accepted standard. The list of supporters announced Wednesday consists of both major rights holders and technology companies, including Adobe, AOL, radio and TV conglomerate Clear Channel, EMI, IBM, MGM, Napster, Sony Pictures Digital Entertainment and Sun.

RealNetworks had been lagging in digital download technology. But with the market for digital media delivery ripe and waiting to break, it's a propitious moment to jump into the business.