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Will Apple Get Real?


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December 05, 2005

Will Apple Get Real?

Rob Hof

Sure doesn't sound like it, judging from what Rob Glaser, CEO of Real Networks, said today at the Digital Living Room conference in Silicon Valley. Glaser was asked if he talked with Jobs about Real's newest service, which lets its Rhapsody digital music subscribers listen to streamed tunes on the Web on any kind of computer, even Macs (but not on the iPod). "We think that Apple Computer and probably Steve Jobs are making a big mistake" by not cooperating to let music subscription services work on the iPod, Glaser replied, before criticizing Jobs' "pigheadedness." "Why view it as a threat when it's an additive service?" He noted that the iPod is clearly the best music player, but that with so many other companies innovating in MP3 players, "this worm will turn too."

As someone who generally prefers the serendipity of my customized Web radio station on Yahoo's LAUNCHcast to my own music collection, I wish these guys could come to some agreement. Or at least that Apple would offer some kind of subscription or radio service that I could use on an iPod (the one I would buy if such a service were available, that is). I'm not alone here. My colleague Peter Burrows is frustrated, too.

After all, as Glaser pointed out, MP3 player owners spend only 20 cents on digital content for every $1 spent on the hardware. That's backwards, to say the least. And 99-cent downloads aren't going to change it.

Neither will subscription and radio services that don't work on the Mac, by the way. As you Mac folks already know if you clicked on that link to my Yahoo radio station, the Yahoo player works only on Windows. So it's not all Steve's fault.

There may be some promising signs. But it shouldn't be taking this long. Guys, just knock down the walls to the music, and I'll pay for it. OK?

UPDATE: Some Apple zealots (see Comments below) seem to misread me almost willfully, with several suggesting that I want to play Windows Media files on my iPod and the like. Nope, I don't care what format it is. If Apple would offer some kind of service like Rhapsody or Launchcast, it would be game over, and I'd be Apple all the way. I also find it a little weird that Apple zealots seem to feel that simply because Apple does a good job, nobody has a right to ask for more. Why not? I'm sure Steve Jobs doesn't settle for merely good enough from his own people.

Hey, I just want to hear a lot of different music, like FM radio used to be (and some college radio still is), only more so because I know the Web makes that possible. And I'd prefer to do that on the best player on the market instead of the second or third best. That doesn't seem too much to ask of Apple or anybody else. I'm waiting here with credit card in hand....

08:00 PM

Apple Computer, Digital Music

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hey you guys,

only half the country has broadband. so now i have to wait for your columnist photos, all of them, to load before i can read an article. who cares what these people look like, i ain't gonna ask any of them to marry me. meanwhile, i wait longer, for no added benefit. your info is some of the best, but it's getting to the point where it's not worth the wait. get real and stop the waste of time. david forjan

Posted by: david forjan at December 5, 2005 08:23 AM

Wait, I'm missing something.

You have iTunes. It works on Macs, on Windows, and on iPod. You have protected WMA, which works on Windows and various MP3 players. You have Real, which works on Windows and the streaming service now works on Macs.

And the fact that all these things won't work together is Steve Jobs' fault. How?

If Steve were to support Real and WMA on the iPod, would Microsoft suddenly support Macs with Windows Media? Would Real suddenly support Macs in their music store? Would Napster run out and build a Mac version? How would allowing the iPod to play these other formats help Mac users?

You seem to have made an odd connection, here.

Posted by: Peter at December 5, 2005 08:30 AM

Apple WILL support streaming & subscription. Wait till January 10. Apple will change the iTunes store in a major way.

Posted by: Tampa Bay Tom at December 5, 2005 10:14 AM

Rob,

Got some bad news for you and Peter. Middle aged men are not exactly the target market for music services like iTunes, Yahoo, Real, Rhapsody, etc. The top 40 chart is not comprised of jazz, easy listening or retro 60's and 70's music.

One other point. iTunes not only sells music...more importantly it sells iPods. Until someone can best iPod and iTunes, Apple will continue to dominate the market.

Cheers!

Posted by: New Flash! at December 5, 2005 12:40 PM

Wow. If only tech columnists had bitched as much about MS' complete monopoly of the OS market as they have about not being able to get music subscriptions to work with an iPod we might actually have a healthy, thriving, OS scene right now.

And about a tenth of the viruses and and malware the MS monoculture has brought us.

Way to keep your eyes on the ball, guys.

Posted by: matt house at December 5, 2005 04:43 PM

These are just Real's expletives just before the wave is about to wipe them out.

Apple is driving and the kids are whining in the back.

Posted by: For the Ages at December 5, 2005 06:09 PM

Hi New Flash,

I unfortunately must plead guilty to being middle-aged, more or less (a place you'll get to if you're lucky). But none of those music genres (least of all easy listening) are to be found on my computer or my Shuffle. The nice thing is, at my advanced age, I don't really care if folks like you think I'm hip or not. The point here is, no matter what's in my collection, I want to sample new stuff without having to spend a buck a song for it. If Apple can't provide that, I'll look elsewhere.

Posted by: Rob Hof at December 5, 2005 08:39 PM

Rob is right.

Apple wants to keep their hip and marginal image by refusing to ally with Real, Microsoft (I downloaded Itunes but couldn't play my .wmas, and the apple .aac format works only on Ipod).

While this strategy is going to work with "cool" people, it's frustrating the mainstream. Right now the only competitive advantage of the Ipod is the brand, the design (and for the nano the size).

IMHO, It will make more sense for everybody to adopt the same format. Apple isn't the standard of computers and should adapt to the standards instead of isolating itself.

Posted by: Mathieu at December 5, 2005 09:12 PM

"While this strategy is going to work with "cool" people, it's frustrating the mainstream. ...

... Apple isn't the standard of computers and should adapt to the standards instead of isolating itself."

I think you have missed something in the last two years! Maybe you have been asleep but Apple is the standard for digital music. No other system or format has been able to compete. Real is just whining because their products suck!! And Microsoft has had so many problems with the WMA's playing on MP3 players that consumers gave up! If you store your digital music in WMA's you deserve what you got!!

Posted by: Daniel at December 6, 2005 11:43 AM

Frustrating the mainstream? I assume you mean a different mainstream than the one that has bought 30 million iPods. If you don't like it, what's the problem? Go buy another player and buy your music from one of the many other online stores. If there's nothing special about the iPod, then people shouldn't have any problem finding a better player/music store elsewhere.

Posted by: johnny5 at December 6, 2005 12:02 PM

"While this strategy is going to work with "cool" people, it's frustrating the mainstream. Right now the only competitive advantage of the Ipod is the brand, the design (and for the nano the size)."

There are 40 million "cool" people? It's over, dude. Apple won this round. Apple isn't frustrating the mainstream at all. The mainstream loves iPods.

There are no market opportunities for anyone to exploit against them. *If* subscription services show any signs of life (and so far they haven't) then Apple will simply do one themselves through iTunes.

Mac users are the weird minority in the OS world. People trying to use WMA are the weird minority in the digital music world.

Posted by: matt house at December 6, 2005 12:24 PM

Itunes and iPod are the standard for audio now - they have achieved critical mass. MS has done much in the past to try and cripple Apple. They did a good job. Mac's have about a 4% market share. Why would Steve ever make ANY deal with a company as two-faced as MS? People that say Apple should follow 'computer standards' have not been following what is happening in the industry. Most now don't see MS's proprietary WMA or WMV formats as standards for the Consumer electronics industry.

Who cares anyway, change is happening fast. Apple is almost half as big as microsoft now - and it's just getting started. Video is the key, Real and MS didn't see it coming and I can imagine that they are scrambling now. Also, the market share of OS X is creeping up now, its going to 5% this quarter and as much as 15% in 5 years. However, Apple will be introducing a new product early 2006, something along the lines of XP MCE but much better and with iTunes audio and video store! So, the market share could be larger. H264 codec has much to do with what will happen in distributed video in the next 3 years.

I think Apple is already moving beyond the Microsofts and Reals of the world. It's the TV cable industry that should be concerned now.

Microsoft (and real) should be trying to strike a deal with Apple to license the protected AAC and H264 (MPEG4) video of the iTunes store instead of Apple licensing protected WMA or WMV, like some lumberheads STILL suggest! After all, protected AAC is considered a standard for on-line purchased digital audio now. iTunes also supports the broadest range of platforms, both MS Windows and OS X which cover ~98% of all users. Protected wma is limited to ~93-94% of the market and shrinking. If you are consumer and want to buy protected digital audio (to burn your own CD's, put on your computer or put on your iPod) iTunes is the best and most safe choice for the future. If you are still using WMA - you are about 2 years behind the leaders.

If you don't like protected AAC or WMA tunes, just buy the CD and rip it to whatever MP3/AAC player you want to at whatever bit rate/quality you want to and quit whining.

And to the writers, I'm sure you know Rob of Real has made similar statements every 3 months since 2003. He is an idiot. Apple will be a larger company than MS in 5 years.

Posted by: Whaaat at December 6, 2005 03:42 PM

I don't think Apple is trying to be hip by not supporting Microsoft. They're trying to pad their lead by not supporting their competitors.

Whether or not this is good, or whether or not it's even legal, I don't think being "cool" really factors in. This is a cut-throat business decision that may or may not work.

Posted by: Jon at December 6, 2005 04:16 PM

And what would apple gain by allowing standardizing of their format? Uh, you already bought an ipod- so why should they want you to get your music elsewhere? I can see how subscription services would be better for browsing music to find what you like, but in the end owning it is better. Or am I supposed to subscribe and then buy music too?

The best use I've found for those subscription services is piracy. We had Napster at my college and you could rip off thousands of songs a month... and I knew many people who did just that.

Posted by: FlashPhire at December 6, 2005 04:17 PM

@ Whaaat>

I'm an Apple fanatic and even I doubt that.

However, in terms of market cap, Apple will be larger than Dell or HP by the end of 2006 - a prospect that will probably land up frightening the hell out of any number of companies including the record industry.

If you take the view that EMI Group plc is worth around $3.4 billion and that, if you broke the music and games operations out of Vivendi-Universal, you'd have a company that was worth about $9 billion, Apple Computer could arguably acquire over 30% of the global music market using its market cap as leverage.

Of course, to do this, Apple would have to acquire the whole of VU - much of which it has no core interest in maintaining. However, selling on the telecoms and broadcasting interests for a mix of cash and shares to one of Europe's rapidly converging telecoms businesses would effectively either raise cash for Apple (it should be worth around ??12 billion, or around $14 billion), or give them a significant stake in a company like Telefonica ($14 billion would give you nearly 20% of Telefonica today), and ensure a mobile distribution channel for iTMS.

Adding in the complete purchase of Akamai would then give the rest of the content industry a real reason to worry (Apple would now be a gatekeeper to the entire market), not to mention that Apple would then have cemented AAC and MPEG-4/H.264 into the mobile industry.

Personally, I can't wait??

Posted by: MCCFR at December 6, 2005 04:51 PM

Rob Glaser is the biggest idiot in the technology universe -- and everyone knows it.

Also, the majority of people don't want to "subscribe" to their music service. They want to own it. This is why iTunes dominates.

Posted by: Josh at December 6, 2005 05:12 PM

If MS, Real, et al want to complain against Apple - all they have to do is provide music in mp3 which iTunes and iPods support. This isn't complicated.

If Apple wants to support Sony, iRiver, etc, they can just as easily provide music in mp3.

MP3 is a perfectably acceptable and usable audio format that is not being used. Blame the RIAA. Until then, you will have companies making proprietary DRMs to lock into their devices. None of them "cares" about the consumer.

At least Apple provides an easy to burn and rip solution so you can take your music anywhere, what do the other guys offer (hrmph).

Posted by: MP3 at December 6, 2005 05:24 PM

Does anyone think about who's selling this stuff. Did anyone else notice the profit margins from iTunes sales reported by Warner's music division lately?

Apple doesn't OWN the media they "sell" so really they're a VAR. The iPod is technically the only media product Apple sells (remember the iTunes software is free).

So if you've got a beef with Apple because of iTunes, you're barking up the wrong tree. And watch my words, the Apple vs Apple Corps lawsuit next Spring will only drive to prove that point.

Posted by: D W at December 6, 2005 05:31 PM

Apple did something very interesting - they invested a substantial amount of money to develop a total musical environment: the iPod, iTunes and the iTunes Store. When it first came out the pros laughed at it and said it would never sell - and they did the same with the iPod mini. They overlooked the elegance of both the hardware and software design as well as to total environment approach. The strange thing is that the customers didn't.

Now the competition is crying foul and begging to be let in. They could have developed something equal, but failed. The greatest factor in Apple's market share is that they earned it. They took risks and, as it turned out, they were right.

Oh, and I'm 61. I've made sure that everyone in the family has an iPod, including my 4 year old granddaughter who has my original 5 gig with a new battery. I also converted all computers in the office and home to Macs in 2004 after using PCs from DOS to XP.

Posted by: Ken at December 6, 2005 05:46 PM

Why should apple help these goofballs by opening up the best music management system there is (itunes) to their outdated formats that have NEVER been standards in the music game?

If you owned a lot of music before you bought an ipod you could convert it to mp3 or aac on Macs and Windows machines using itunes. Before itunes the standard was mp3 (and probably still is). So all of this bitching from Glaser (backed by Microsoft) is really sour grapes about three proprietary formats aac, wmv and rm that are all being sold for profit - last time i checked.

Posted by: James Gallacher at December 6, 2005 05:46 PM

Rob is way off the point in this comment... he's working with an old paradigm if you ask me...

Posted by: Leonard at December 6, 2005 06:20 PM

What has this got to do with the iPod in the first place?

"We think that Apple Computer and probably Steve Jobs are making a big mistake' by not cooperating to let music subscription services work on the iPod."

I'd like to see the complete quote rather than rely on this paraphrase. My hope is that Glaser said 'iTunes' rather than 'iPod'. In that case Mr. Hof has shifted the discussion dramatically. If not Glaser needs to find a leg to stand on.

If you don't own the file you can't take it with you. Remember the ownership part of the subscription equation? Apple may be ready to venture into this arena but even they will be hard pressed to extend licensing so that music can travel with the iPod which can take us into many other arguments.

In any case Real's web based solution doesn't change anything. If that's their way of opening the service to other platforms, fine. I'll be sticking with iTunes and the ITMS if I don't feel like actually buying a CD. How did we ever find enough music before the digital revolution?

If Apple does go subscription... say good to night Mr. Glaser.

Posted by: Chris A at December 6, 2005 06:23 PM

I certainly got the results I expected when I posted my comments...

Apple dominates the PORTABLE music world, not the digital music market as a whole. There are far more mp3s out there than AAC or WMA, the dominant force is the free open standard.

I wish Apple, but also Microsoft, Real and co didn't spend that much time fighting each other trying to impose standards like wma and aac

(contrary to what you might have thought, I don't really like wma, but they're smaller than mp3s for the same quality and play on every PC with windows media player... you know... 95% of all computers)

As far as "cool" goes, the Ipod is sold on the hip factor, the mainstream wants to be hip and cool, so the mainstream buys Ipods. I think the Ipod in itself is a great product (I just bought a nano for my wife, while I do have a Creative Zen Micro) but its competitive advantage is bogus.

Apple bigger market cap than MSFT, let me laugh, if Apple gets bigger than just one of the three business of MSFT I'll give you all my msft shares.

I like both companies, but you've got to understand that Apple outside of the portable entertainement is a niche player.

Posted by: Mathieu at December 6, 2005 07:04 PM

Think you are way off here (Rob ed.). The iTMS is the standard today, just like Windows has been for years. The problem may be, just like the Mac OS vs. Windows war these past two decades, that there needs to be a better link between all these company's, as it will be us consumers paying the big price later on, if we don't get a standard all-platform format, that works on all iPods/MP3 players and all media players as well.

This however is never going to happen. Apple likes their position in the market now, and I really don't know why some people don't see why. Microsoft is just as interested in gaining market-share in as many fields as possible. This is pure business.

IMHO What we really need is a guaranty, that all our music can be downloaded again, in the case of a hard-disk crash, virus attack etc. with no extra cost. This shouldn't be a problem, unless someone is making it somewhere. I mean...it's just ones and zeros, there are no manufacturing costs in replicating/copying a song, and making it available as download able multiple times via the music/video/media store.

The good thing here, is that we actually might see a service like this one in the upcoming MacWorld Expo in January. Rumors say that Apple will launch a new service, where it will be able to stream the content from your .Mac account, so that you'll never be afraid that all you media collection could go away, if your computer broke down/crashed. This can be compared to see your house burnt down, with all your family photos and old CD collections etc. turning in to ash.

Will this be a success? Most likely! Will "the others"(Real/Microsoft/Napster) follow their (Apple's) footsteps? Most likely!

Posted by: Mars at December 6, 2005 07:27 PM

While I understand that you do enjoy your Yahoo! radio Rob, Apple is and has never been a follower company. Apple creates paradigm shifts that end up creating new markets, new followers, in many cases progress, yet they do occasionally have limits when comparing the macintosh community to the windows community. There are some features that Apple lacks in iTunes, I do agree. However, overall it is many leaps and bounds better than any single solution. While you might have great features with Yahoo! radio, you probably listen to CDs on your built in computer player or with WinAmp. If you want to buy your music you have to shop at a store. If you watch short videos online, it's probably through WMP or Quicktime (I do hope you don't use Real's crap of a player).

While noone expects you to have to change your ways, most people realize (30million counting) that adjusting at times can be good. In this case it is also attempting to make your life easier. iTunes is your one stop shop for everything both free and fee based, and is steadily growing. Unfortunately the partnerships don't exist currently for full fledged films and many television shows and music videos, but it is far more complete than perhaps anywhere but Yahoo. iTunes also throws in the added benefit of syncing with your iPod easily so you can bring any of this with you. It also is far simpler to use.

While you don't have to follow my advice, I hope that you try out iTunes for a short time. I am sure you will find Apple's numerous podcasts more than worthy to replace your talk based radio streams, and its radio function which has existed since at least iTunes 3, to take care of your musical needs. However, if you are asking Apple to get into the business of radio so they can put free content on your iPod, why not get yourself a 20 dollar FM portable radio. The iPod serves a different purpose and shouldn't be susceptable to all the criticism from the Glasers' of the world. iTunes is as open as you are going to get because they don't act submissive to the RIAA. Windows's or any of the other MP3 player companies don't really care about the real issue at stake... the music. They care about selling their product. I am not going to talk stupidly and say that Apple doesn't, but Apple is doing it in a way which is pitting them against the RIAA, mono(poly) e mono(poly). The real problem at hand is the RIAA who don't give into demand because no reseller has ever had the power Apple currently does. Apple is allowing more consumer freedom... song previews before buying, buying singles, back catalogs, free songs, introducing us to new artists rather than the same 80 on repeat. While I, like everyone is in favor of consumer benefits through the free market, where is the actual problem with Apple here? Is it just that everyone loves hating on the big guy? Why is it that Apple has to make the first move?

Posted by: Ryan at December 6, 2005 08:01 PM

First of all, your baldhead is blinding me. Second of all, I have no interest or inclination to support WMA or Real. I would never ever ever install anything from Real on my Mac. That should be a crime in itself. I also would never install WMP on my Mac. Again, no way. None of this would benefit me and I know a lot of other Mac users who feel the same. Companies that can't make it, don't have good products, or are too lazy to beat the competition start to whine and complain and cry. They just want someone to do it for them or try and make the market leader change for them. If you can't cook, get out of the kitchen. Real was just given 700'something million from MS, so do something with it. Of all the people I know that have iPods, I have never heard one of them complain because they could listen to some damn wma file.

Most of you "tech" columinsts just jump on the bandwagon for whatever is the current bitching topic from whatever company is doing the complaining because they are failing. Give it up, move on.

Posted by: SlimFlem at December 6, 2005 08:21 PM

"I want to sample new stuff without having to spend a buck a song for it. If Apple can't provide that, I'll look elsewhere."

Go ahead, look elsewhere, because honestly, brutally, Apple will NOT miss you and it won't put a dent into Apple's success. Bye bye Rob (Hof AND Glaser). And good luck.

"I don't really like wma, but they're smaller than mp3s for the same quality and play on every PC with windows media player... you know... 95% of all computers)"

Umm in case you missed it, AAC is smaller than MP3 for greather quality AND it's based on an open source standard. As far as WMA "playing on 95% of all computers", who cares? Windows is a dying OS (thought it may not seem like it), and rightfully so, because it's a BAD OS. Microsoft has been digging it's grave for YEARS through complancency and hubris, plus Windows was NEVER ever a good OS to begin with. Windows should be renamed "The Accidental OS", because that is what it is. The future is NOT Windows, far from it.

Posted by: NickCharles at December 6, 2005 08:30 PM

Can't wait to sell those shares of that worthless msft stock to buy more aapl(all time high and climbing). Make good on that holiday spirit Mathieu.

Posted by: Me at December 6, 2005 08:56 PM

The Rhapsody one trick pony is nothing more than for Rob Glaser to start whining again and at the same time give false claim that Real is somehow providing a cross-platform solution that includes Mac and Linux users. From what I see in the spec sheet, the service is still crippled and is still 'really' Windows-only. If Real wants to preach about openness, it should be delivering on openness itself before pointing fingers at others!

Just because Microsoft licenses its proprietary and Windows-only technology to 3rd party developers doesn't magically make it an open solution in any way, shape or form!

Posted by: JuggerNaut at December 6, 2005 10:24 PM

Apple has insanely great software that is Mac-only, like the iLife suite, Keynote, and their pro-apps, such as Final Cut, DVD Studio Pro, and their brand new Photoshop 'Thriller' app, Aperture. Not one of these runs on Windows. "No fair?"

No, quite fair.

Apple has had a great strategy of late: Make great software that works on the best OS - X. Apple could make all this work under Windows if they wanted to sell software, but that's not Apple: They want to sell the experience: hardware+software+online+community. That's why iPods and iTunes are locked down - and why Apple's stock price defies all odds. Apple is in business to make a profit - and apparently to have fun in the process. They drop a huge wad of cash on R&D every year, innovating their way out of the doldrums a few years ago as Jobs promised.

IF - and here me when I say IF - Apple sees a legitimate business need to change their model, they will.

Imagine if Apple completely re-wrote their OS to sit atop Unix... (Oh, they did that).

Imagine if Apple switched from IBM/Motorola to Intel... (Oh, they're doing that).

Imagine if Apple did wacky things like drop floppy drives and offer a multi-button mouse... (Hmmm, sounds familiar).

Jobs has made it clear they WILL offer subscriptions and/or offer WMA support *if the market demands it* - not the media or the competition. And given Apple's market share right now in digital music, they ain't goin' no place else right now.

Posted by: Jodeo at December 6, 2005 11:00 PM

Cowon iAudio U3 is your answer! Blows the iPod away and works with every format under the sun, plus subscription content!

http://www.cowonamerica.com/products/iaudio/u3/

Posted by: Steve at December 7, 2005 01:04 AM


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