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RealNetworks buys Xing MP3 technology

Encoding, streaming specialist snapped up for $75 million

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RealNetworks has bought MP3 software developer Xing Technology for up to $75 million worth or RealNetworks stock. The deal gives Real access to Xing's MP3 AudioCatalyst encoding and decoding software and StreamWorks streaming MP3 application, all of which it will use to extend its RealPlayer application to support the MPEG-based format. "With the acquisition of Xing, RealNetworks can now better serve the huge market of new artists choosing to use MP3 to legally distribute their work," said Real's CEO, Rob Glaser. The important part of the sentence is the phrase 'legally distribute'. RealNetworks clearly wants to stay on the right side of the Recording Industry Association of America and its Secure Digital Music Initiative (SDMI), yet it's equally certain that the company reckons that MP3 is going to continue to play an important role in the online music world, whatever specification the SDMI comes up with. Otherwise why not simply wait for the SDMI to issue its final report, which it's due to do later this year, and incorporate that? It's somewhat ironic that Real has chosen to buy an MP3 software company since it always hoped that its own RealAudio format would become the de facto standard for music streamed or downloaded via the Internet. It's a sign, perhaps, of how out of touch RealNetworks has been that it's only now that it has come to consider MP3 a force in what is arguably one of its core markets, and that it feels it lacks the internal resources to add MP3 delivery to RealPlayer. $75 million is, after all, rather a lot to pay for encoding and decoding software based on an open compression standard. Still, since Real is funding the deal with a new share issue, it won't in fact cost it anything. And, to be fair, Xing does come with much expertise in MPEG video transmission and streaming, both core technologies for Real. ® See also RealNetworks backs IBM digital music system a2b unveils latest digital music player, format

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