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RealNetworks cuts big deals as market share shrinks

And its legal case against Streambox is set back

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RealNetworks has, for now, failed to gain a permanent injunction against Streambox, whose Ripper software converts RealNetworks' proprietary RealAudio format into MP3 files. The temporary set-back followed hot on the heels of a mixed week for RealNetworks. On the positive side, it signed deals technology and digital music distribution deals with Sony and Universal, respectively. The downside was the news that RealNetworks' near-total domination of the streaming media market is now down to little over 50 per cent thanks to Apple's QuickTime and Microsoft's Windows Media Technologies (WMT). In its case against Streambox, RealNetworks has already had some success. Recently it was granted a temporary injunction blocking the distribution of Ripper, which, it claims, violates RealNetworks intellectual property and is harmful to its business. The company also claims Ripper infringes US copyright protection law. It makes the same charges against StreamboxVCR, which converts streamed RealAudio data into MP3 files for playback at a later date. This time, however, US District Judge Marsha J. Pechman said she required more time to consider the merits of the case, and could therefore only extend RealNetworks' temporary injunction further. Which she did. An official ruling will be made on 17 January, five days after both Streambox and RealNetworks file their findings of fact and findings of law. If the case goes against RealNetworks, it will be a bitter pill to take. Maintaining tight control of its format has always been key to the company's streaming business, since it ensures it's the only company that can supply player and encoding software. Its rivals have used that fact in their efforts to promote their own alternatives -- Apple, for one, saying its QuickTime server software is free of charge (and open source) and thus free of what it calls RealNetworks' "server tax". It was Apple CEO Steve Jobs who this week pointed out that, according to Nielsen NetRatings for November 1999, put RealNetworks' share of the streaming media market at just 53 per cent, well down from the upper 80s it had this time last year. QuickTime had 33 per cent, WMT just 14 per cent. Jobs also noted, during his keynote at Macworld Expo in San Francisco, that of under-21 year-olds, QuickTime had a 30 per cent share, compared to WMT's 25 per cent and leaving RealNetworks at the bottom with 23 per cent. Of course, while that shows QuickTime in the lead, it also shows how close together the key players are, suggesting that none are likely to dominate the market. Instead, they will simply jostle for a few percentage points' lead. Still, if RealNetworks loses its control of the streaming media business, it nevertheless appears to be making ground in the digital music world. The deal with Sony allows RealNetworks to incorporate Sony's ATRAC3 music compression format, Sony's would-be digital music standard, into RealJukebox, RealNetwork's would-be digital music player standard. RealJukebox will also support Sony's OpenMG copy protection technology. Meanwhile, RealJukebox has become the preferred download and playback system for 'big five' recording company Universal's online digital music distribution network. Again, this involves building support for Universal's own copy protection system. RealNetworks wants RealJukebox to become the universal player for the digital music world, and the partnerships with Sony and Universal, along with its support for its own format, MP3 and others takes the software a couple of steps closer to achieving that goal. ®

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