Music industry watch

Real vs Apple

Yesterday I talked a bit about Real dropping their prices in hopes of capturing some marketshare. I focused mainly on the price issue, trying to stay out of the whole Apple vs Real issue...

And yesterday there were a bunch more developments on this front. First off, we have the knee-jerk/immature reactions to the Hey Apple, Don't Break My iPod! online petition. That was ugly -- no doubt. Then Nelson chimes in with a reasoned response:

I'm puzzled by the backlash against RealNetworks for figuring out how to get music onto the iPod. Sure, I think Real makes crummy products too. But they've opened up Apple's proprietary platform, increasing choice for consumers and lowering prices. How does the user lose?

Then Fred from the EFF weighs in with good examples on this issue:

If Real actually cared about "Freedom of Music Choice," it would be telling its customers to burn the downloaded music they purchase to CD, then rip to any DRM-free format they like (including MP3, WAV, or AAC, all of which play just fine on the iPod). That's a much better option than being dragged into a feud between Apple and Real.

. . .

Real's own end-user licenses expressly forbid reverse engineering, even where that activity would be lawful as a fair use.

Before I go any further, let me give full disclosure: I am a Helix Community (read: Real Networks) grant recipient. So, take this post with a grain of salt, ok?

I agree with both Nelson and Fred. While talking with Rob Lanphier (of Helix Community fame) before our LinuxWorld panel I got more signs that Real is now trying to do the right thing and become a more balanced company. I think Real's efforts on Helix Community are right on, but they are plagued with nearly a decade of dodgy marketing practices. Shaking off this history is going to take a long time and be a painful struggle. So, in that sense I agree with Nelson, in that Real is doing something that could have benefits for the general music listening public. Time will tell if this is a sneaky ploy to get marketshare, or if there are sincere motivations. I certainly hope for the latter.

Fred is also right -- given Real's history and their current use of DRM their position does appear hypocritical. But, DRM is both a security blanket for the record labels and an anti-competitive tool to protect their markets. Both Real and Apple had to play this game to get their stores off the ground -- otherwise the record companies would not play along. Now that they are entrenced in DRM, its hard to sort out who is the righteous one. Pointing fingers at one another is not really productive.

Here is something I don't understand: If Apple's mission is to sell iPods and the iTunes store is a break-even proposition, and Real's mission is to sell content, what would Apple have to lose by allowing Real's customers to push their files onto the iPod?? Make Real a reseller of the iPod and give more customers the option of getting their music onto the iPod. That serves as great marketing for the iPod and Apple products in general.

Is Apple hiding something about their motivations? Or is it just an issue of pride for Apple?

Posted by Mayhem at August 19, 2004 11:28 AM