RealNetworks’ new software turns PCs into jukeboxes

Though not the first of its kind, RealNetworks’ product carries weight because of the Seattle company’s strong position in Internet media. With about 60 million registered users, the company claims an 85% share of the market for software that allows audio and video to "stream" over the Internet to users’ computers and play almost at once.

The RealJukebox product is part of a new shift by the company into the additional market of recordings that are downloaded and played backlater. Significantly, RealNetworks’ product supports a controversial music format called MP3 in addition to the company’s proprietary file format.

Catalyst for Change

"This is our most important breakthrough since RealAudio was introduced," said Rob Glaser, RealNetworks chairman and chief executive officer, referring to the company’s first major product. "I think it can really be a catalyst to drive forward digital delivery."

Increasing numbers of people already are using the Internet to download music to PCs and handheld devices. A recent report by Forrester Research Inc of Cambridge, Mass, predicted that digital-music downloading will be a $1.1 billion market by 2003.

It takes about a hefty 44 megabytes of disk-drive space in a PC to store a typical CD using RealJukebox. But Mr. Glaser and some analysts predict that disk-drive capacities are expanding so quickly that PCs will increasingly become the tool of choice to manage music libraries. MP3 is currently the most popular way to storemusic digitally, with quality that is nearly as good as a CD. But MP3 has been controversial within the recording industry, since many users violate copyright protections.

RealNetworks has been attempting to deal with the dueling constituencies. It recently announced an agreement with International Business Machines Corp. to develop technology for delivering music over the Internet while protecting copyrights. But RealNetworks also recently acquired Xing Technology, a San Luis Obispo, Calif, maker of audio and video technology that supports MP3.

Meanwhile, rival Microsoft Corp is stepping up the pressure, both in streaming media and in a technology for downloading music. Its new Media Player uses an alternative file format to MP3 and includes piracy protections. When a downloaded digital-music file is opened, for example, the application determines whether the user has the right to play it by checking a database or related Web site.

Microsoft last month demonstrated prototype jukebox software. Andstartups MusicMatch Inc, already in the jukebox field, and Sonic Foundry also announced plans to sell such programs based on Microsoft’s file-format and copyright-management scheme.

Will Poole, Microsoft’s senior director of marketing and business development for streaming media, predicted RealNetworks will face opposition on the piracy issue. "The music industry will not smile on any effort to popularize a technology that makes it easy to record music without the proper rights management in place," he said.

RealJukebox can store and play unprotected MP3 files. But it comes with a default setting that links files to a single PC so they can’t easily be passed around. A user can change that default, but the program warns that the user might be violating copyright laws.

Glaser said the transfer of CD recordings to PCs is "fair use" undr copyright laws. But RealNetworks is in discussions with recording companies about protection schemes. In the future, for example, it may be possible to add markers to musicto trace it to the person who recorded or purchased it. However, Mr. Glaser said, such markers also bring up important privacy issues that must be addressed.