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Apple disables RealNetworks music on iPod photo

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By LC Angell

Contributing Editor
Published: Tuesday, December 14, 2004
News Categories: iPod

Apple’s iPod photo contains updated firmware that blocks songs downloaded from the RealNetworks music store from being played on the device, according to CNET News.com. “The move could render tunes purchased by many iPod owners unplayable on their music players. For the last four months, RealNetworks has marketed its music store as the only Apple rival compatible with the iPod, following the company’s discovery of a way to let its customers play their downloaded tunes on Apple’s MP3 player. Apple criticized RealNetworks’ workaround, dubbed Harmony, as the ‘tactics…of a hacker,’ and warned in July that RealNetworks-purchased songs would likely ‘cease to work with current and future iPods.’”

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Comments

21

“Real’s Harmony technology convinced me to buy an iPod, since I already had 200 purchased tracks from the RealPlayer Music Store. I have a friend who wants to buy two 40GB iPods. Perhaps I will tell him to buy something else.”

So you paid like zero attention when Apple stated that Harmony won’t work for long? And now I should feel bad for you? No, I feel bad for your friend since the way you state it he will do as you say.

Posted by jharyd in Philadelphia on December 15, 2004 at 6:31 AM (PDT)

22

I will assume that no one who has posted here is an Apple or Real employee, though the fervor with which some arguments are made make this dubious.

Why is it a bad thing from our (the Ipod user, the consumer) perspective to enable providers, like Real, to give us flexibility? Forget whether it’s a good or bad business decision or if it’s evil of Apple or if Real is desperate or whatever. Look at it purely from the user’s point of view. How can anyone who buys music for their Ipod be happy that they now have less options?

I have purchased from Real Networks. Especially during their 50% off promo. I used Harmony technology to update my Ipod. The benefit was that I bought many albums with BETTER sound quality than iTMS (this is not even close) from Real and I didn’t have to jump through hoops to get them on my IPOD. So, as a user, I just don’t see how this is a good thing that Apple has done. If you think so, then you are a fool who is too caught up in this “Apple/Ipod validates my existence” thing that seems to have run amuck.

Posted by zpick on December 15, 2004 at 6:41 AM (PDT)

23

What am I missing here? The iTunes Music Store exists to sell iPods. Wouldn’t letting the FairPlay genie out of the box make FairPlay that much more entrenched? I’m not saying Apple should let other players play FairPlay, I’m saying they should let other outlets sell their DRM. Seriously, love Apple or hate them. I don’t see the logic in not letting the format proliferate…

Posted by bipto in Minneapolis, MN on December 15, 2004 at 7:13 AM (PDT)

24

I bought many albums with BETTER sound quality than iTMS

You know I don’t really use either iTMS or Harmony so I was unaware of this fact, but looking at the Real’s site I see that their files are encoded at 192Kbits, compared to iTMS at 128 Kbps. So the Real encodings will probably sound better than Apple’s encodings, mainly because, let’s face it, 128Kbits is just going to flatten complex music.

So it seems that in this case competition within the free market was doing what it is supposed to do: increase quality and enhance consumer experience. And rather than respond by increasing the quality of the tracks it offers to compete with Real (thereby incurring conversion costs, and higher bandwidth and hosting costs), Apple instead decided to squish it dead. Interesting,

Posted by Demosthenes on December 15, 2004 at 7:18 AM (PDT)

25

Whether people like it or not, Apple has a right to make business decisions.  Yes, business decisions.  Every company has a right to design a product with certain features (or perceived limitations).  Likewise, every company has a right to sell that product with those features (or perceived limitations). 

Companies make these decisions in hopes of making a profit.  Yes, profit.  Remember, this is why people start a business - TO MAKE MONEY.  Geez people, this seems to be lost on some of you.  Apple is not a non-profit organization.  It’s Apple.com, not Apple.org.  It’s Apple Computer, Incorporated, not the Apple Computer Foundation for the Charity. 

iTMS may have been created to sell iPods, but it’s also making millions of dollars.  No company in their right mind would make a business decision to decrease profits.  Microsoft does the same thing, so does Adobe, Macromedia. 

Why do you think Real created Harmony?  To make money.  It was not to give consumers “choice” - it was to create source of revenue for their struggling company. 

Look at EA Sports.  EA Sports signed an exclusive agreement with the NFL to make NFL video games.  Why?  Becaues Sega (ESPN Football 2K5) was undercutting them on sales and posed competition.  Is EA Sports “evil”, “wrong”, or “hypocritical”?  No.  They made a buisness decision to retain the profits they were making on Madden 2005.  Where are the forums, the message boards declaring EA Sports as “evil”? 

For good or bad, Apple is a company.  If you thought otherwise, you had the wrong expectations.

Posted by ipod21 on December 15, 2004 at 8:15 AM (PDT)

26

Bad news is that now iTMS dictates what we can buy and listen to!  iTMS cannot be a one stop shop they need to licence so that specialty stores can sell lets say obscure music to play on the iPod…

Posted by Altoid on December 15, 2004 at 8:31 AM (PDT)

27

Why do you think Real created Harmony? To make money. It was not to give consumers “choice” - it was to create source of revenue for their struggling company.

All companies act to increase profits, that’s the nature of capitalism. The theory is that when companies compete then consumers benefit from the invisible hand. That’s why we have antitrust laws to encourage competition. All companies in the US must act within the bounds of competitive law as we have defined it. Selectively and willfully blocking access by a cheaper competitor to a platform or market is a clear violation of the Sherman Act. And that is what Apple has done.

The “free market” does not stay free in a vacuum. Left to its own devices, all economies would eventually decay into uncompetitive oligarchical crony capitalism. One of the reasons the US economy is so vibrant is that it has some of the most stringent safeguards against antitrust conspiracies. You don’t think Real is already bleating to the DoJ about Apple’s illegal actions then dream on.

People scoffed for years that the complaints by Real and Sun and SGI could harm Microsoft. Yet cast your mind back to the early-mid 1990s. MS was top of the heap. Bill Gates was on the cover of every magazine. His book was at the top of the bestseller charts. Yet eventually the complaints grew too numerous, too frequent. Within a few years his company was convicted of criminal conspiracy by the US Government. The damage done to MS’s reputation was immense. Gates ended up donating half his fortune to a foundation in an effort to reclaim some goodwill.

Posted by Demosthenes on December 15, 2004 at 8:37 AM (PDT)

28

If you want Apple to open up the iPod to formats offered by other music stores, then sign the “Hey Apple! Don’t Break My iPod!” petition.

Posted by Skaboobie in Buffalo, NY on December 15, 2004 at 8:49 AM (PDT)

29

192kbps vs 128kbps is really a big difference in quality, considering I use a pair of ER6i to listen on my Ipod. I never purchased from any online music stores, but most of my music are encoded at 192~320kbps, the majority of my songs are either downloaded (P2P) or ripped from CD by myself. As long as Apple allows me to play my own MP3s, I don’t think there is a problem for me. However, I don’t see giving more choices to consumers will pose any threats to Apple’s profit. Imagine that if Apple ban all illegally downloaded MP3s from playing on an IPod, I’m sure the popularity of IPod will take a big hit. Apple should try to match what consumers want instead of taking away from them; if IPod users want their music to be 192kbps, then why don’t Apple make ITMS competible with Real?

Posted by wesley1943 in Texas on December 15, 2004 at 9:17 AM (PDT)

30

Demo -

The difference between the MS computing monopoly and Apple’s dominance of the digital music market (whatever that industry is called) is the importance that industry has to the overall market. 

MS was cited for antitrust violations, not because of complaints, but because of ligitimate illegalities.  Complaining and whining about a product does not mean it’s illegal.  Sun, Oracle, etc; had legitimate cases against MS.  (I’m not going to argue the details, no besides a lawyer or judge is going to really be able argue the point fully). 

Real’s “complaints” against Apple have more to do with Apple not wanting to cooperate with Real.  Given Real’s conduct by their CEO (possibly the most immature CEO in the industry behind Ballmer), I can’t blame ANY company from not wanting to work with them. 

The market is still very “open” - you can buy many different digital music players and choose from many different music services.  Some of those players may only work with one or a few of those music services.

This isn’t about a monopoly, it’s about consumer choice.  Those complaining the loadest simply don’t like the choices consumers are making. 

To borrow a phrase, “To be the man, you’ve got to beat the man.”  Make a superior producet, design a super service and innovate.  Don’t ride the coat tails of someone else. 

Posted by ipod21 on December 15, 2004 at 9:27 AM (PDT)

31

Hokka, saying there should only be one format is the same as Microsoft saying there should only be one operating system. Garbage.

Posted by bluejacket in London on December 15, 2004 at 9:27 AM (PDT)

32

Those complaining the loadest simply don’t like the choices consumers are making.

Yes, the classic example being Apple, deciding that it didn’t like how iPod owners were choosing to buy licensed tracks through Real and so crippling their playback on the iPod.

MS was cited for antitrust violations, not because of complaints, but because of ligitimate illegalities.

The FTC and the DoJ do not, as a rule, seek out and prosecute antitrust violations de novo. They act on the basis of referrals and complaints, either by companies wishing to merge or by competitors alleging anticompetitive behavior.

And resorting to ad hominem attacks against the Real CEo is n’t really going to change the substantive issue of Apple’s antocompetitive behavior.

You say that the difference is in the size of the market. I’d say that controlling access to the online music business is a large enough industry segment to worry about.

So reading between the lines of your article, what you’re saying is that you feel that Apple has the right to control what formats are played back on the iPod, regardless of the wishes of the owners of those iPods? Is this really what you are saying?

Posted by Demosthenes on December 15, 2004 at 9:36 AM (PDT)

33

Make a superior producet, design a super service and innovate.

You know, a cynic might say that releasing 192 KBit tracks at a higher quality than the market leader was innovation, and that producing a media manager that could work with both Windows and Apple players and move tracks between them was a superior service.

Posted by Demosthenes on December 15, 2004 at 9:38 AM (PDT)

34

This whole format argument is a moot point for the vast majority of MP3 player users. Most of us still buy (or borrow) CD’s, and online purchases account for less than 2% of sales per song.

This means the Sherman Act isn’t enforcable because iTunes lets you rip a CD into AAC or MP3 (and other formats). On top of that, YOU can select the bit rate of tracks you rip.

As for complaining that iTunes rips to AAC by default; Windows Media Player rips to WMA by default plus it uses the DRM too. Both can be changed to rip to MP3 or other formats.


Personally, I’m only interested in iTunes to purchase individual tracks. I see absolutely no justifiable reason to buy an album online when you can usually go buy an uncompressed/perfect recording on CD for close to the same price and that usually includes liner notes.

My iPod was purchased based on it’s functionality alone. No other MP3 player comes close to usability. It plays my thousands of MP3’s ripped over the last 7 years just fine.

The whole argument about Apple being the giant here, is all because of Microsoft. Real is just trying to get a piece of the pie. If Apple opens up the iPod to other formats, Microsoft will use that as an open invitation to destroy Apple’s market share. So pick your sides, who do you really want to control music downloads? You have two choices. Real isn’t one of them.

Posted by Saurus on December 15, 2004 at 10:41 AM (PDT)

35

“The FTC and the DoJ do not, as a rule, seek out and prosecute antitrust violations de novo….”

That is true.  But my point is simply complaining doesn’t make it illegal.  You have to have merit to your claim.  Real’s claim is simply that Apple doesn’t want to cooperate with them.  The DoJ and other Agencies would laugh that off.  Show where irreputable harm has come to Real and you may have point. . 

“You say that the difference is in the size of the market. I’d say that controlling ...”

For the average person walking down the street, it’s not.  The competition loves to claim that if you buy an iPod that holds 10,000 songs, well then you must buy 10,000 songs from iTMS.  Common sense shows this isn’t true.  If I buy an iPod, I can load it with songs from iTMS, or I can go to any retailer and buy a CD.  If I want to be evil and mean, I can use Kazaa or another file sharing program.  I could even go to some foreign download site and buy DRM free music .  The point is, I have a choice in how I put music on my iPod.  The assumption many competitors like Real make is that the only way to put music on your iPod is through iTMS, therefore it’s a monopoly.  That’s simply untrue.  There are many people, probably those who aren’t even going to know about a website like iPodLounge, who will just buy a CD and rip it in iTunes and put it on their iPod.

I’m sure you can say, “How can Real compete if their service doesn’t work on the iPod?”  Simple:  Not everyone buys an iPod.  There’s a lot of players that have more features and do more.  Olympus has a pretty nice player coming out soon.  If I bought that player, maybe I’d use Real to download some music.  Who knows. 

The problem with Real’s business model is that is a service dependent on hardware.  If the consumer chooses hardware that Real cannot work with, Real’s out of luck.  But as mentioned, not everyone chooses an iPod. 

Purhaps Real should market their service as “THE” service for non-iPods.Instead, they try to bash the company the makes the hardware they need to sell their service?  Carve a nitch, “think different” to coin a phrase.  That’s what Apple did with the iPod - they found a market that wasn’t very well developed and made a superior product.  There were many MP3 players before the iPod, but only the iPod made it easy for people to actually use the technology.

(con’t)

Posted by ipod21 on December 15, 2004 at 10:53 AM (PDT)

36

(con’t)

Real’s arragance gets in their way.  Find a way to promote your service while playing well with others.  Other companies have done this.  AOL, HP, MS, IBM, Motorola, etc; have found ways to work with Apple.  Heck, even PayPal knows how to get on the iTMS bandwagon. 

The lesson Real needs to learn is to look at what makes other companies sucessful.  They don’t do this.  (Seriously, the CEO of Real writes ‘work with me or else’ emails to Jobs and then expects Apple to cooperate?  Get real!  Anyone with a business degree knows you don’t do that!).  This is a common problem in the technology industry.  “My products better than yours, nah nah nah”.  It’s childish. 

I know Jobs can be just as arragant, but he has the marketshare and sales figures to back it. 

Posted by ipod21 on December 15, 2004 at 10:55 AM (PDT)

37

pick your sides, who do you really want to control music downloads? You have two choices. Real isn’t one of them.

What you are saying here is that you want a duopoly cartel to control all legal music downloads and set prices and permissions.

It’s sad that so many people seem willing to abandon the ideals and efficiencies of the free market.

Posted by Demosthenes on December 15, 2004 at 11:15 AM (PDT)

38

simply complaining doesn’t make it illegal. You have to have merit to your claim. Real’s claim is simply that Apple doesn’t want to cooperate with them.

Of course a claim doesn’t make anything legal or illegal. But it can cause the appropriate agencies to investigate.

The issue with Apple is not that it is refusing to work with Real… it is refusing to work with anyone. It bought the company that created FairPlay and has refused to license it on the open market. In effect, it has created a secretive cartel to control access.

Think for a moment if Sony/Philips, after creating the CD player, had not in fact opened the “CDDA” license to everyone willing to pay, What if they had played favorites and only allowed certain companies willing to pay specific and discriminatory prices access to the CD platform? Obviously CDs would not have been such a big success. And, obviously, their actions would have been illegal.

Requiring license fees to access a platform or a market is not illegal. But restricting licensing, playing favorites, and practicing discriminatory licensing is exactly where a company with a monopoly position moves from fair competition to illegal tying. And that is where Apple is right now.

Posted by Demosthenes on December 15, 2004 at 11:20 AM (PDT)

39

I don’t advocate a duopoly, but the current state of affairs, we have 3 competing DRM formats. Real has virtually ZERO market share, so that leaves Microsoft’s DRM and Apple’s DRM. Hey that happens to be a duopoly!

The free market that you so happily advocate has been using MP3 for well over a decade. Now thanks to Sony’s change of heart, MP3 plays on ALL digital music players. So your free market point is moot. Start ripping those DRM’s onto CD’s and what do you have? Oh that’s right MP3 rippable material.

The fact that iPod plays AAC and the three dozen other players DON’T combined with the fact that iPods outsell all the other players by factors greater than 10 to 1 proves what? Since nobody bribed me to buy an iPod, then I’d consider that a free-market decision to choose a collection of formats advocated by Apple.

If you want to advocate using Real’s Harmony technology then go buy a player that plays it, that’s your decision, and just think of the choice you have to pick from!

Licensing is and always has been a choice. It’s usually done in order to take marketshare away from the current market leader. For example:

Java vs ActiveX (MS)
VHS vs BETA (Sony)

Microsoft licensed it’s format to take away marketshare from Apple. Since Microsoft had negligible marketshare to begin with, they had nothing to loose.

Posted by Saurus on December 15, 2004 at 11:38 AM (PDT)

40

Oh, I love the smell of a debate in the afternoon…

Demo - you do have good points about the claims and investigations.  I’m not aware of the exact rules on this, so I’m not going to argue anything. 

If Real really thinks this is a problem, then they should have someone investigate.  In the end, I just don’t see how anyone could say it’s noncompetitive yet.  You can make this arguement in another five years possibly, but the music service/download market hasn’t yet matured.  The iPod has only been out since 2001 and iTMS even less. 

Running to the DoJ is like having your mom call the coach when you didn’t make varsity basketball.  You didn’t make basketball because you couldn’t shoot, or pass, or run… Real can’t shoot, or pass, or run right now.  It’s not because someone prevented them from practicing, it’s because someone started practicing alot sooner and worked alot harder.  Real entered the game late and is having the same problems competing other companies are having.

You can argue that Apple is making it hard on other companies to compete, but that’s also called creating a competitive advantage.  The competitive advantage to Apple’s iPod and iTMS is that that work hand in hand, seemlessly.  No other company does this (Napster and Samsung to some extent).  Apple pumps alot of money in R&D and marketing.  When was the last time you saw a Real Music Service commercial on TV?  Never.  Maybe they can hire Billy Idol or someone to promote it (BuyMusic and Tommy Lee was just bad). 

Seriously though, what has Real done to warrant anyone’s business?  Pricing alone doesn’t rule this market.  A lot of people won’t buy Real’s music because the last time they installed RealPlayer, it messed up their computer, or installed adware/spyware of some kind.  Would their music do the same thing?  Who knows?  Maybe not, but they’ve got to give the consumer a reason.  Again, go after the non-iPod users.  There’s money to be made out there.  The market’s asking for a service to step up for non-iPod users.

Posted by ipod21 on December 15, 2004 at 11:52 AM (PDT)

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