Real announces a loss-leaderer promotion to get people to try their iPod crossover technology (recall that licensing alone runs about $0.30/song, and that Apple doesn’t make any money on $0.99 downloads)): RealNetworks slashes song prices
For a limited time, RealNetworks will offer song downloads from its music store for 49 cents, along with half-price albums. A nationwide print, radio and Web marketing campaign will promote the offer, along with a Web site touting “freedom of choice” for online music consumers.
The campaign is the second wave of publicity around the company’s “Harmony” technology, which effectively recreated a version of Apple’s proprietary copy-protection technology without permission. That has allowed RealNetworks to be the first non-Apple store that can distribute songs directly compatible with the iPod music player, despite strong protests from Apple itself.
See also Wired News’ Real Bites Apple on Downloads, The Register’s Real halves music prices, widens loss and the NYTimes’ RealNetworks Plans to Sell Digital Music at Half Price, which includes this:
Mr. Glaser acknowledged the company would not benefit directly from selling music at a loss, but he said that he believed that it would help force Apple to change its policy about licensing the iPod to play music from competitors.
Related from SFGate: Apple’s strategy a familiar tune: Firm’s grip on iPod draws comparisons to how it handled the Macintosh
Later: A different perspective, recommended by a reader - Why 2004 Won’t Be Like 1984
The only proprietary aspect of the iPod is with protected audio formats, a.k.a. DRM. The songs Apple sells through the iTunes Music Store are protected using Apple’s own FairPlay DRM system; and it’s the one and only DRM system Apple supports.
But for all the publicity and attention the iTMS has garnered, it’s essential to put it in perspective. Apple has now sold just over 100 millions songs through the iTMS. But how many billions of songs do iPod users already own, legally and legitimately ripped from CD?
This isn’t a hidden feature. There’s no trick to it. Apple exerted itself to make it as easy as possible to transfer your music from CDs to your iPod. You put an audio CD in your computer; you click one button in iTunes; you connect your iPod.
That’s compatibility. If you enjoy music enough to consider buying a $300 iPod, there’s a good chance you have a CD collection numbering in the hundreds. Thousands of songs, which cost thousands of dollars. The iPod and iTunes fully embrace your existing music collection.
Already have music in MP3 format, from sources unknown? The iPod and iTunes will play them, no questions asked. That’s compatibility.
(Compare and contrast to Sony, whose latest supposed “iPod-killer” stubbornly only plays songs in Sony’s proprietary ATRAC format.)
Point being, for all the attention it gets, the iTMS is a completely optional part of the iPod experience. You can buy an iPod and completely fill it with music without spending a single dollar at the iTMS.
And, of course, Slashdot - Real Cuts Prices for DRM-Restricted Music; plus this slam from Forrester Research: Commentary: RealNetworks lobs another grenade