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Dot-com meltdown? What dot-com meltdown? Gloom certainly wasn't in the air on Dec. 4, as RealNetwork launched its new music-subscription service and media player with all the glitz of an old-fashioned high-tech lollapalooza. More than 100 reporters and analysts packed into the ballroom of a Midtown Manhattan hotel to hear CEO Rob Glaser sketch out his plans for a "revolution" in the online media-delivery business.
Of particular interest: The RealOne Music service. It's the first label-backed music-subscription scheme to come to market that will give fans an opportunity to legitimately download and stream songs from powerhouse labels Warner Music, BMG, and EMI -- for a price.
In his rumpled suit, the fast-talking Glaser played the role of emcee, calling "special guests" up to the stage, including Britney Spears clone Willa Ford, who sported a sweatsuit and high-fashion Gucci sunglasses and gushed about how the service would change the way consumers find their perfect harmonies. Glaser declared: "This is such a dramatic change, it's fair to call it a revolution. There's no reason why every broadband user wouldn't want to sign up for this service."
UPHILL BATTLE. Well, that may be carrying it a bit far. The RealOne Player is indeed an impressive piece of software that offers Netizens the ability to search out, play, and manage digital media files. RealOne Music, too, is a strong first effort. For $9.95 a month, subscribers can download and stream 100 songs each month from a collection of more than 100,000 popular tunes.
However, it's clear the service is still a work in progress. And with so much still unsettled in the post-Napster world, RealOne Music faces an uphill battle to persuade many consumers to start paying for something they've been getting for free.
Truth is, a plethora of free music is still available on the Web. While Napster is long gone, other file-swapping services, including Morpheus, Kazaa, and Grokster, have quickly filled its shoes. Despite a new rash of lawsuits, such services continue to increase in popularity: Research firm Webnoize reports the number of digital-music files downloaded through such outlets jumped 20% in October, to 1.81 billion. At any given time, as many as 1.3 million file traders were logged on, up from 1 million in September.
NO PAVAROTI. Here's another challenge: RealNetwork still hasn't clinched licensing deals with two of the Big Five labels, Sony and Universal. That means for $9.95 a month, RealOne subscribers can download songs from Britney Spears or Kid Rock -- but not The Cranberries or Luciano Pavarotti. That's similar to shopping at Tower Records but only finding 60% of the CDs available.
It's likely many consumers will continue to opt for a free service until a pay service can at least offer a complete selection. Just when RealOne will secure the licenses isn't clear. Glaser and analysts believe a deal is in the offing -- perhaps after the launch of rival service PressPlay, which is expected before yearend.
Finally, RealOne doesn't allow music to be burned to CDs or loaded into portable players. That means users who listen to music at work and at home will have to download the songs in both places, using up 2 of their 100 monthly downloads for the price of one -- something Glaser calls "metered portability."
"BIG PROBLEM." Glaser admits these restrictions may turn off some users, but he suggests they were the result of tough negotiations with the labels. "Tying music to the PC is our most significant compromise. We're more likely to get concessions once we've proved that we can deliver reliable security on PCs."
He's right. The labels are famously skittish about letting go of perfect digital versions of their songs for free. After all, look what happened with Napster. RealNetworks has some experience in pushing its subscription services. Since September, 2000, its GoldPass service -- now rebranded RealOne Membership -- has attracted more than 400,000 paying customers.
Still, tethering music to a user's PC is a "big problem," according to Aram Sinnreich, a digital music analyst at Jupiter Media Metrix. "The thing consumers love most about digital music is its portability. Without it, you might as well use a CD."
Glaser concedes the point: "There are a couple of things wrong," he told BusinessWeek Online. "But the trends are moving in the right direction. The wind is at our back." Glaser says his only aim is to create "something that's good enough to criticize" -- a reference to researcher Alan Kay's now-famous techie quote about the 128K Mac. And in that, he has certainly succeeded.
Black covers technology for BusinessWeek Online in New York Edited by Douglas Harbrecht
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