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RealNetworks-Microsoft Rivalry Heats Up

The companies are using the Streaming Media West show as a forum for strengthening their respective market positions in the digital media arena.
The battle for digital media supremacy has hit new heights at this week's Streaming Media West show in Long Beach, Calif. In one corner is RealNetworks Inc., which on Wednesday finally introduced its own digital-rights-management software and revealed a cooperative effort to push for a new standard for securely delivering movies and music online. In the other corner is Microsoft, which is busily demonstrating how its technology already makes secure delivery of digital media possible.

Both companies appear to be taking somewhat different approaches. Whereas Microsoft has pulled back from its efforts in the content arena and has refocused entirely on technology, RealNetworks has established strong relationships with major content owners such as Bertelsmann, Metro Goldwyn Mayer Studios, and Clear Channel Communications. Each of those companies--along with AOL Time Warner, EMI Recorded Music, and Napster--are endorsing RealNetworks' extensible media commerce language (XMCL) initiative, the standardization push RealNetworks plans to take before the World Wide Web Consortium. Bertelsmann, EMI, and AOL Time Warner also have partnered with RealNetworks on the MusicNet subscription service planned for launch this summer.

Webnoize analyst Lee Black says handicapping the race between Microsoft and RealNetworks for dominance in the digital-media-technology arena is nearly impossible. Black says corporate users and consumers appear to begrudgingly favor the media quality and usability of Microsoft's desktop technology, but that the company's lack of relationships with content owners could prove to be a distinct disadvantage. "The technology edge is with Microsoft, but the business-climate edge is with Real," he says.

Dave Fester, general manager of Microsoft's Windows digital media division, admits the company has moved away from the content side of digital delivery. Fester says Microsoft is committed to ensuring that its audio and video technologies remain innovative enough to prevent its customers from feeling they need to switch formats. "We're in this for the long term," he says. RealNetworks, on the other hand, doesn't want content owners to feel locked into their current technologies. "They want to know they have the flexibility to choose multiple distribution paths," says Ben Rotholtz, general manager of products and systems. To that end, Rotholtz says RealNetworks' new digital-rights-management offering, RealSystem Media Commerce Suite, is not tied to particular devices, operating systems, or back-end infrastructures.