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Rob Glaser Responds, Talks Up Real Networks
The 10 questions we sent Real Networks CEO Rob Glaser were selected from 37 that were moderated +5 about 24 hours after we posted the "call for questions" last week. As promised, Glaser answered them himself rather than through PR people, but since part of a CEO's job is to be his company's number one booster it's not surprising that his answers have a high PR component to them; yours would too if you were in his position.
1) Apple Support - by ack154
Since RealNetworks is all for "compatibility" and getting their stuff to play on the iPod, when do they plan to offer support for Macintosh users in the Rhapsody music store?
Glaser:
No plans as of now.
We're one of the most active Mac ISVs around, with our RealPlayer running on millions of Macs. We also offer our Superpass and RadioPass premium content products, and we offer more than 45 premium downloadable Mac games such as Shape Shifter, Bounce Out Blitz, and Text Twist.
Having said that, since the Mac is such a small part of the overall market, we make practical decisions about what functionality and services we offer on the Mac. So far, offering a music store or the Rhapsody subscription service on the Mac hasn't made the cut.
2) It still comes down to price, for a lot of us - by erick99
How much wiggle room is there in the pricing of the songs? Forty-nine cents a song has made me a customer of Real's for now ( I haven't tried any .99 cent services - don't want to pay that much). I know it's unlikely that music can be sold that inexpensively but we know it doesn't have to be .99 since WalMart is doing .88. So, I am wondering what RealNetworks' pricing strategy will be. While I understand you cannot differentiate on price alone, the rest isn't going to matter if the price is .99. I just won't buy at that price (yes, obviously others will, but I maintain that multiples more will at a sustained, lower price).
Glaser:
Here's a long answer to a short question.
The music industry supports 2 models of legitimately selling music services that allow consumers to listen to a jukebox in the sky (but not keep the music), and services that sell a permanent copy of the song to the consumer. We have 2 different services depending on which model consumers want.
The best deal out there today for price-sensitive customers who love music is our Rhapsody music service (www.Rhapsody.com). It is a jukebox in the sky type of service that allows consumers to listen to as much music as they want for a fixed price of $10/month. Then, when consumers find a song they want to own permanently, the song costs 79 cents, basically a membership discount for Rhapsody subscribers.
After just a year of us running the Rhapsody service (We acquired listen.com last August), we have hundreds of thousands of Rhapsody subscribers who get great value out of the service. In fact, our average Rhapsody subscriber listens to over 200 songs/month, including over 100 different songs. If the consumer had to purchase all those different songs they'd be paying over 10 times as much as what Rhapsody costs.
Our RealPlayer Music Store is a pure example of the second model. As part of our introduction of our Harmony technology (which allows digital songs to play on a virtually any popular MP3 player), we put every song in the store on sale at 49 cents. The promotion was a smashing success, resulting in us selling over 3 million songs in about 3 weeks.
The 49 cent for everything promotion is now over, but it was such a big success that we decided to continue to feature a Top 10 list of songs for 49 cents each, with the rest of the songs back at the usual price. This is also going well and our store sales are well ahead of where they were before we launched Harmony, which says to us that a lot of people like what Harmony offers and are going to continue to buy from us for reasons of more than just price.
Now let me answer your question about why songs cost 99 cents (or 88 cents or 79 cents, but not usually 49 cents). Selling songs legitimately consists of 3 components: the cost of the recording, which we usually pay to the record company (who then pays the artist); "publishing" cost which goes to the company that owns the rights to the musical composition (who pays the song writer); and other costs such as credit card fees, bandwidth, and technical support.
While wholesale prices vary depending on the label, today most labels charge approximately 65-70 cents per song. Publishing costs a fixed rate of about 9 cents per song. And the other costs average a few pennies per song. Thus, as we have made clear, selling every song in our store for 49 cents a song is not sustainable unless/until the labels change their pricing philosophy.
Based on the data we've seen, we think, long-term, the pricing that will result in the biggest overall market for music will involve some kind of tiered pricing new mainstream songs for 99 cents retail, and up-and-coming artists and back catalog artists at a lower price.
We are working with the labels to prove this to them. We think over time we will succeed, but it will take time. The more that customers support our efforts both directly (by voting with your wallets) and by communicating directly to the music industry, the better.
3) Media formats and proprietary control - by Performer Guy
Given the ongoing struggle for control of content distribution via proprietary formats, do you see any hope for more vendor neutral formats that don't tie customers to one particular 'technology'? It seems that constantly changing formats often have more to do with vendor lock-in than genuine technological differentiation. What is Real doing to improve this situation and are other vendors likely to cooperate?
Glaser:
We have done a number of things in the past few years to address interoperability and to move digital media toward much better and stronger interoperability while also supporting open source development on our platform through the Helix open source licensing program.
The single biggest thing we've done in the past year -- and maybe ever -- was to create Harmony, which (as you probably know) is a technology that translates between the main secure audio content formats Helix DRM, Windows Media DRM, and Apple's DRM.
Going back a few years, we took the core of our media delivery system, Helix, and made it open source. We then built a universal media delivery system -- Helix Universal Server -- on top of that platform. What's more, we fundamentally changed our software development methodology for Helix to a community-based approach. Indeed, we strongly encourage slashdot readers to join the Helix community at helixcommunity.org, as thousands of developers have already done.
We also have been active supporters and drivers of a number of open industry standards including RTSP for streaming and UPnP for media delivery across devices.
We think these initiatives are consistent with where the net is going much more focus on open systems and open formats, and much more focus on interoperability.
Unfortunately, competitors of ours such as Apple and Microsoft haven't followed suit. They have their own reasons for this. Apple apparently is focused on controlling an end-to-end secure music system, and Microsoft is focused on extending their proprietary Windows platform everywhere.
In light of this, we remain committed to enhancing interoperability and openness wherever it makes sense. However, what we haven't done is "unilaterally disarm" in the way that, for instance, Netscape did. All that would do is allow competitors with proprietary agendas to "embrace and extend" on top of our formats, while keeping their own proprietary, which ultimately wouldn't achieve anything.
4) Turnabout? - by Elwood P Dowd
What would you do if the next version of Quicktime could play .rm files, even ones with DRM? Suppose that they respect the DRM, and only play on authorized computers. Suppose Quicktime Pro were capable of creating .rm files with DRM.
Why shouldn't Apple do this?
Glaser:
We would be happy to cross-license our DRM and formats to Apple to enable exactly the kind of interoperability you propose.
As has been widely reported, we approached Apple about licensing their DRM several months ago. It was only after they rebuffed those initiatives that we came out with Harmony, which implemented software compatibility with their DRM as well as with Microsoft's.
5) Why is Real's software so intrusive? - by jerkychew
I've been in the computer industry since 1995 or so. In that time, I've seen lots of software come and go, and lots of less-than-ethical tricks to keep users hooked on one piece of software instead of another. In my 9 years or so, I've never seen any product as consistently sneaky as Real's media player. I remember back when RealAudio would make itself the default player for every media type it could without asking, which would annoy the tech-savvy user and scare those of us that are less technical.
While it seems that Real has backed its intrusiveness down a notch during the install, I still feel like Real is telling me what to do on my computer instead of the other way around. For example - Telling Real not to start when windows starts is no easy task. I have to go through 3 or four submenus in the preferences until I find the vaguely-named SmartCenter (or StartCenter? I don't have a machine handy to doublecheck the name). Even then, when I tell it not to start with Windows, I am greeted by a scary warning message. Even with SmartCenter disabled, Real's update service still lives in my registry, starting every time I boot windows.
So my question is, why try so hard to force your software on the user? Is it worth the market share to anger and confuse your core audience? Mention Real to the average user, and their first response is "I hate that software. I wish I knew how to delete it."
I've always been taught that it's best to make your customers happy, instead of holding them hostage. Does your business model say otherwise?
Glaser:
We have put a lot of effort into making our users happy and in giving users lots of choice in how they install and use our software. We have learned a lot over the years and I think if you look at RealPlayer 10 for Windows, Mac, or Linux carefully, you would find that it gives users much more choice and control over how our player works than any other major media player, including Microsoft's Windows Media Player or Apple's iTunes.
While I'm not 100% sure, from your description it sounds like you have a previous version of RealPlayer. In RealPlayer 10, the user can select Tools/Preferences/Automatic Services and configure all of the background activity, including features that remain active when RP is not running. With just a couple of mouseclicks, the user can disable all background services.
Compare how our software works to Microsoft's. Have you ever tried to "uninstall" Windows Media Player? All Windows does, in its own words, is "removes access to Windows Media Player from the Start Menu and Desktop," yet it doesn't actually get rid of the software. If you uninstall RealPlayer, we uninstall the whole enchilada. Same with mime types: we ask you what mime types you want our player to play, and then we only play those. On the other hand, when you upgrade your version of Windows, it takes the mime types it wants to without even asking. What's more, we've been told by reliable sources that Microsoft writes into its contracts with computer OEMs that the OEM MUST make Windows Media Player the default player for major mime types, otherwise the OEM doesn't get access to critical marketing funds that every PC manufacturer needs to stay in business.
Regarding your question of why we have put the features you want on specific menus, I will ask the guy who runs our player product group to take a close look at how we can make control of the specific features you have described even more obvious. My guess would be that the tradeoff is making the features available to technical users without confusing average users. Even so, we'll try to do even better next time. I promise that we will do our best to keep improving our software for both regular consumers and technical users.
6) Helix - by MikeMacK
What prompted the creation of the Helix community? Does Real see open source as a way to differentiate themselves from Apple and Microsoft, or where there other considerations?
Glaser:
Our reasons for creating the Helix community and to making the core of our system open source are the reasons best described in Eric Raymond's classic manifesto The Cathedral & the Bazaar (I imagine you all have memorized your favorite link to it, but in case not: http://www.redhat.com/support/wpapers/community/cathedral/whitepaper_cathedral.html).
Basically we realized about 3 years ago that digital media was becoming huge and ultimately it made much more sense for us to open up our system so it could be the foundation of great work by everyone rather than the work done just by our company and close allies.
What's more, we fundamentally changed our software development methodology to a community-based approach for Helix. Three years and tens of thousands of Helix community members later, we've made lots of progress. We know that this is a long-term process and that proprietary-based media delivery systems won't go away anytime soon. But this is no different than the Linux versus Windows battle.
7) Legality of Harmony - by halo1982
Are you concerned at all that Apple might sue Real under the DMCA for basically hacking the iPod to allow compatibility between Real and the iPod? If Apple does do this, what measures are you taking to make sure that the files people buy from Rhapsody will continue to play on their iPod after Apple locks Harmony out using a firmware update or something similar, and would you offer refunds to people with iPods who purchased music on Rhapsody?
Glaser:
The legality of Harmony under the DMCA is well established in law. It's important to understand that Harmony simply added a new way to secure the content we've licensed from music companies. We didn't mess with the locks on any of Apple's music. The DMCA contains a specific provision enabling companies to create just this kind of interoperability. Take a look at a recent case, Chamberlain v. Skylink, which describes how courts look at this in the real world.
We think it would be extremely anti-consumer for Apple to stop the music by intentionally breaking compatibility with Harmony. In the event that they do, we have a comprehensive plan in place, but it's not appropriate for me to go into details now. I will point out that Harmony will continue to work for any current iPod user who chooses to have RealPlayer manage that iPod (and who doesn't use iTunes, a future version of which might be the vehicle that Apple would use to break compatibility).
8) Nice, but.... - by dacarr
While I find it wonderful that Real has embraced Linux, your subsidiary, listen.com, seems antagonistic toward Linux, making it quite clear that they have no plans at this time to move their Rhapsody player to Linux. This tells me of a bit of a dichotomy in your company. Are there plans to resolve this?
Glaser:
I don't think it's about one division at Real versus another. It's about software versus services. We have made a significant commitment to delivering Linux versions of our software products on both the client and server side, and we're grateful for the support we've received from the linux community.
Delivering consumer services on Linux would be a new step for us; indeed, there are very few content services available today for Linux, reflecting the fact that the Linux desktop market is still quite nascent.
So, what we're doing now is looking at ways in which our Linux efforts can gather enough momentum that makes this a simpler decision. We're working closely with the Linux distributors to grow the market for Linux desktops by having a solid media player solution. And we're investigating which of our service offerings we can offer to Linux users in a cost-effective manner. Our goal is to start building a direct revenue base that we can then use to fund more ambitious efforts.
9) Lessons learned from astroturfing - by michaeldouma
There's a lot of spin going on at Real's new Freedom of Music Choice [freedomofmusicchoice.org] site. Clearly, Real was not expecting such a profound and immediate [slashdot.org] backlash. It must be frustrating [slashdot.org] that Apple gets to be both an underdog and a monopoly at the same time. But despite the feel good claims [freedomofmusicchoice.org] on your Freedom site (did you really write those?), your price drop, reverse engineering, and activism are hardly riling up the public.
What have you learned from this?
Glaser:
We're very happy with how our freedom of choice campaign for Harmony has worked. As you know, we sold over 3 million songs in 3 weeks, well beyond our expectations. Moreover, the tens of thousands of users who have bought songs from us and are continuing to enjoy the benefits of Harmony speak for themselves.
It's certainly true that a small group of Mac lovers gave us a hard time for criticizing Apple. This isn't that surprising because Mac users are very sensitive anytime anyone criticizes Apple, I guess because they emotionally identify with Apple as the "underdog" versus Microsoft. But for every Mac user who didn't like our criticizing Apple, there were literally hundreds of Windows users who enjoyed Harmony, including iPod users who sent us their comments (see http://www.realnetworks.com/company/press/releases/2004/real_3million.html).
The campaign was successful because consumers really do want choice. We hired an independent research firm to ask internet consumers about this. 96% of portable device owner said they thought they should be able to move music they bought to any device, which gives us great confidence that we're on the right side of history.
10) Strategy Question - by Anonymous Coward
Strategically speaking, Real doesn't look to be in a very promising position. Its technology, once unique (RealAudio), is now ubiquitous. Its marketing has been, by any account of which I am aware, a disaster. Now it seems like there is no area in which Real has any real strength or over its competitors - RealMedia is eclipsed by Windows Media, iTunes rules the day in downloading and Microsoft is entering that market as well.
Rob, what advantages does Real bring to the table? What can Real do that no other company can do? Why does Real exist? What the hell are you doing?
Glaser:
Well, your question has more than a bit of a "when did you stop beating your wife" feel to it, but I'll address the core question, which is what are we trying to do and how are we doing.
Since many SlashDot readers don't necessarily read all the details of our financial statements, let me talk a bit about our business. 2004 is on track to be the biggest revenue year in our history. In the first half of the year we had sales of $125.9 million. Our second quarter sales were 65.5 million, which is 32% over our revenue for the same quarter last year. We ended the quarter with over 1.4 million subscribers to our premium services, including over 550,000 subscribers to our music services, both of which were records and make us #1 in the business.
In terms of our products, Rhapsody is not only #1 in subscribers, it also wins pretty much every review as the music service that is best and easiest to use. RealPlayer 10 was also PC Magazine's editors' choice and also many other awards.
Of course we have competitors if we were a monopoly you would have other reasons to criticize us. :)
Having said that, we're as different from our competitors as Yahoo is from its competitors. We're focused on creating services that deliver great experiences to consumers regardless of what platform they use. This is very different from either Apple or Microsoft, both of whom center their services on their proprietary platforms (Mac/iPod in Apple's case, Windows in Microsoft's case).
I started RealNetworks more than ten years ago because I believe strongly that the Internet can and will transform how people experience media, giving them unprecedented control over what audio and video they experience, and when, where, and how they experience it. While there have been many twists and turns along the way, we're very pleased with the progress we're making both as a company and as an industry. And we feel great about the opportunities in front of us.
With that, I'd like to that you all for your questions and for taking the time to read and think.
Best,
Rob
Since RealNetworks is all for "compatibility" and getting their stuff to play on the iPod, when do they plan to offer support for Macintosh users in the Rhapsody music store?
Glaser:
No plans as of now.
We're one of the most active Mac ISVs around, with our RealPlayer running on millions of Macs. We also offer our Superpass and RadioPass premium content products, and we offer more than 45 premium downloadable Mac games such as Shape Shifter, Bounce Out Blitz, and Text Twist.
Having said that, since the Mac is such a small part of the overall market, we make practical decisions about what functionality and services we offer on the Mac. So far, offering a music store or the Rhapsody subscription service on the Mac hasn't made the cut.
2) It still comes down to price, for a lot of us - by erick99
How much wiggle room is there in the pricing of the songs? Forty-nine cents a song has made me a customer of Real's for now ( I haven't tried any .99 cent services - don't want to pay that much). I know it's unlikely that music can be sold that inexpensively but we know it doesn't have to be .99 since WalMart is doing .88. So, I am wondering what RealNetworks' pricing strategy will be. While I understand you cannot differentiate on price alone, the rest isn't going to matter if the price is .99. I just won't buy at that price (yes, obviously others will, but I maintain that multiples more will at a sustained, lower price).
Glaser:
Here's a long answer to a short question.
The music industry supports 2 models of legitimately selling music services that allow consumers to listen to a jukebox in the sky (but not keep the music), and services that sell a permanent copy of the song to the consumer. We have 2 different services depending on which model consumers want.
The best deal out there today for price-sensitive customers who love music is our Rhapsody music service (www.Rhapsody.com). It is a jukebox in the sky type of service that allows consumers to listen to as much music as they want for a fixed price of $10/month. Then, when consumers find a song they want to own permanently, the song costs 79 cents, basically a membership discount for Rhapsody subscribers.
After just a year of us running the Rhapsody service (We acquired listen.com last August), we have hundreds of thousands of Rhapsody subscribers who get great value out of the service. In fact, our average Rhapsody subscriber listens to over 200 songs/month, including over 100 different songs. If the consumer had to purchase all those different songs they'd be paying over 10 times as much as what Rhapsody costs.
Our RealPlayer Music Store is a pure example of the second model. As part of our introduction of our Harmony technology (which allows digital songs to play on a virtually any popular MP3 player), we put every song in the store on sale at 49 cents. The promotion was a smashing success, resulting in us selling over 3 million songs in about 3 weeks.
The 49 cent for everything promotion is now over, but it was such a big success that we decided to continue to feature a Top 10 list of songs for 49 cents each, with the rest of the songs back at the usual price. This is also going well and our store sales are well ahead of where they were before we launched Harmony, which says to us that a lot of people like what Harmony offers and are going to continue to buy from us for reasons of more than just price.
Now let me answer your question about why songs cost 99 cents (or 88 cents or 79 cents, but not usually 49 cents). Selling songs legitimately consists of 3 components: the cost of the recording, which we usually pay to the record company (who then pays the artist); "publishing" cost which goes to the company that owns the rights to the musical composition (who pays the song writer); and other costs such as credit card fees, bandwidth, and technical support.
While wholesale prices vary depending on the label, today most labels charge approximately 65-70 cents per song. Publishing costs a fixed rate of about 9 cents per song. And the other costs average a few pennies per song. Thus, as we have made clear, selling every song in our store for 49 cents a song is not sustainable unless/until the labels change their pricing philosophy.
Based on the data we've seen, we think, long-term, the pricing that will result in the biggest overall market for music will involve some kind of tiered pricing new mainstream songs for 99 cents retail, and up-and-coming artists and back catalog artists at a lower price.
We are working with the labels to prove this to them. We think over time we will succeed, but it will take time. The more that customers support our efforts both directly (by voting with your wallets) and by communicating directly to the music industry, the better.
3) Media formats and proprietary control - by Performer Guy
Given the ongoing struggle for control of content distribution via proprietary formats, do you see any hope for more vendor neutral formats that don't tie customers to one particular 'technology'? It seems that constantly changing formats often have more to do with vendor lock-in than genuine technological differentiation. What is Real doing to improve this situation and are other vendors likely to cooperate?
Glaser:
We have done a number of things in the past few years to address interoperability and to move digital media toward much better and stronger interoperability while also supporting open source development on our platform through the Helix open source licensing program.
The single biggest thing we've done in the past year -- and maybe ever -- was to create Harmony, which (as you probably know) is a technology that translates between the main secure audio content formats Helix DRM, Windows Media DRM, and Apple's DRM.
Going back a few years, we took the core of our media delivery system, Helix, and made it open source. We then built a universal media delivery system -- Helix Universal Server -- on top of that platform. What's more, we fundamentally changed our software development methodology for Helix to a community-based approach. Indeed, we strongly encourage slashdot readers to join the Helix community at helixcommunity.org, as thousands of developers have already done.
We also have been active supporters and drivers of a number of open industry standards including RTSP for streaming and UPnP for media delivery across devices.
We think these initiatives are consistent with where the net is going much more focus on open systems and open formats, and much more focus on interoperability.
Unfortunately, competitors of ours such as Apple and Microsoft haven't followed suit. They have their own reasons for this. Apple apparently is focused on controlling an end-to-end secure music system, and Microsoft is focused on extending their proprietary Windows platform everywhere.
In light of this, we remain committed to enhancing interoperability and openness wherever it makes sense. However, what we haven't done is "unilaterally disarm" in the way that, for instance, Netscape did. All that would do is allow competitors with proprietary agendas to "embrace and extend" on top of our formats, while keeping their own proprietary, which ultimately wouldn't achieve anything.
4) Turnabout? - by Elwood P Dowd
What would you do if the next version of Quicktime could play .rm files, even ones with DRM? Suppose that they respect the DRM, and only play on authorized computers. Suppose Quicktime Pro were capable of creating .rm files with DRM.
Why shouldn't Apple do this?
Glaser:
We would be happy to cross-license our DRM and formats to Apple to enable exactly the kind of interoperability you propose.
As has been widely reported, we approached Apple about licensing their DRM several months ago. It was only after they rebuffed those initiatives that we came out with Harmony, which implemented software compatibility with their DRM as well as with Microsoft's.
5) Why is Real's software so intrusive? - by jerkychew
I've been in the computer industry since 1995 or so. In that time, I've seen lots of software come and go, and lots of less-than-ethical tricks to keep users hooked on one piece of software instead of another. In my 9 years or so, I've never seen any product as consistently sneaky as Real's media player. I remember back when RealAudio would make itself the default player for every media type it could without asking, which would annoy the tech-savvy user and scare those of us that are less technical.
While it seems that Real has backed its intrusiveness down a notch during the install, I still feel like Real is telling me what to do on my computer instead of the other way around. For example - Telling Real not to start when windows starts is no easy task. I have to go through 3 or four submenus in the preferences until I find the vaguely-named SmartCenter (or StartCenter? I don't have a machine handy to doublecheck the name). Even then, when I tell it not to start with Windows, I am greeted by a scary warning message. Even with SmartCenter disabled, Real's update service still lives in my registry, starting every time I boot windows.
So my question is, why try so hard to force your software on the user? Is it worth the market share to anger and confuse your core audience? Mention Real to the average user, and their first response is "I hate that software. I wish I knew how to delete it."
I've always been taught that it's best to make your customers happy, instead of holding them hostage. Does your business model say otherwise?
Glaser:
We have put a lot of effort into making our users happy and in giving users lots of choice in how they install and use our software. We have learned a lot over the years and I think if you look at RealPlayer 10 for Windows, Mac, or Linux carefully, you would find that it gives users much more choice and control over how our player works than any other major media player, including Microsoft's Windows Media Player or Apple's iTunes.
While I'm not 100% sure, from your description it sounds like you have a previous version of RealPlayer. In RealPlayer 10, the user can select Tools/Preferences/Automatic Services and configure all of the background activity, including features that remain active when RP is not running. With just a couple of mouseclicks, the user can disable all background services.
Compare how our software works to Microsoft's. Have you ever tried to "uninstall" Windows Media Player? All Windows does, in its own words, is "removes access to Windows Media Player from the Start Menu and Desktop," yet it doesn't actually get rid of the software. If you uninstall RealPlayer, we uninstall the whole enchilada. Same with mime types: we ask you what mime types you want our player to play, and then we only play those. On the other hand, when you upgrade your version of Windows, it takes the mime types it wants to without even asking. What's more, we've been told by reliable sources that Microsoft writes into its contracts with computer OEMs that the OEM MUST make Windows Media Player the default player for major mime types, otherwise the OEM doesn't get access to critical marketing funds that every PC manufacturer needs to stay in business.
Regarding your question of why we have put the features you want on specific menus, I will ask the guy who runs our player product group to take a close look at how we can make control of the specific features you have described even more obvious. My guess would be that the tradeoff is making the features available to technical users without confusing average users. Even so, we'll try to do even better next time. I promise that we will do our best to keep improving our software for both regular consumers and technical users.
6) Helix - by MikeMacK
What prompted the creation of the Helix community? Does Real see open source as a way to differentiate themselves from Apple and Microsoft, or where there other considerations?
Glaser:
Our reasons for creating the Helix community and to making the core of our system open source are the reasons best described in Eric Raymond's classic manifesto The Cathedral & the Bazaar (I imagine you all have memorized your favorite link to it, but in case not: http://www.redhat.com/support/wpapers/community/cathedral/whitepaper_cathedral.html).
Basically we realized about 3 years ago that digital media was becoming huge and ultimately it made much more sense for us to open up our system so it could be the foundation of great work by everyone rather than the work done just by our company and close allies.
What's more, we fundamentally changed our software development methodology to a community-based approach for Helix. Three years and tens of thousands of Helix community members later, we've made lots of progress. We know that this is a long-term process and that proprietary-based media delivery systems won't go away anytime soon. But this is no different than the Linux versus Windows battle.
7) Legality of Harmony - by halo1982
Are you concerned at all that Apple might sue Real under the DMCA for basically hacking the iPod to allow compatibility between Real and the iPod? If Apple does do this, what measures are you taking to make sure that the files people buy from Rhapsody will continue to play on their iPod after Apple locks Harmony out using a firmware update or something similar, and would you offer refunds to people with iPods who purchased music on Rhapsody?
Glaser:
The legality of Harmony under the DMCA is well established in law. It's important to understand that Harmony simply added a new way to secure the content we've licensed from music companies. We didn't mess with the locks on any of Apple's music. The DMCA contains a specific provision enabling companies to create just this kind of interoperability. Take a look at a recent case, Chamberlain v. Skylink, which describes how courts look at this in the real world.
We think it would be extremely anti-consumer for Apple to stop the music by intentionally breaking compatibility with Harmony. In the event that they do, we have a comprehensive plan in place, but it's not appropriate for me to go into details now. I will point out that Harmony will continue to work for any current iPod user who chooses to have RealPlayer manage that iPod (and who doesn't use iTunes, a future version of which might be the vehicle that Apple would use to break compatibility).
8) Nice, but.... - by dacarr
While I find it wonderful that Real has embraced Linux, your subsidiary, listen.com, seems antagonistic toward Linux, making it quite clear that they have no plans at this time to move their Rhapsody player to Linux. This tells me of a bit of a dichotomy in your company. Are there plans to resolve this?
Glaser:
I don't think it's about one division at Real versus another. It's about software versus services. We have made a significant commitment to delivering Linux versions of our software products on both the client and server side, and we're grateful for the support we've received from the linux community.
Delivering consumer services on Linux would be a new step for us; indeed, there are very few content services available today for Linux, reflecting the fact that the Linux desktop market is still quite nascent.
So, what we're doing now is looking at ways in which our Linux efforts can gather enough momentum that makes this a simpler decision. We're working closely with the Linux distributors to grow the market for Linux desktops by having a solid media player solution. And we're investigating which of our service offerings we can offer to Linux users in a cost-effective manner. Our goal is to start building a direct revenue base that we can then use to fund more ambitious efforts.
9) Lessons learned from astroturfing - by michaeldouma
There's a lot of spin going on at Real's new Freedom of Music Choice [freedomofmusicchoice.org] site. Clearly, Real was not expecting such a profound and immediate [slashdot.org] backlash. It must be frustrating [slashdot.org] that Apple gets to be both an underdog and a monopoly at the same time. But despite the feel good claims [freedomofmusicchoice.org] on your Freedom site (did you really write those?), your price drop, reverse engineering, and activism are hardly riling up the public.
What have you learned from this?
Glaser:
We're very happy with how our freedom of choice campaign for Harmony has worked. As you know, we sold over 3 million songs in 3 weeks, well beyond our expectations. Moreover, the tens of thousands of users who have bought songs from us and are continuing to enjoy the benefits of Harmony speak for themselves.
It's certainly true that a small group of Mac lovers gave us a hard time for criticizing Apple. This isn't that surprising because Mac users are very sensitive anytime anyone criticizes Apple, I guess because they emotionally identify with Apple as the "underdog" versus Microsoft. But for every Mac user who didn't like our criticizing Apple, there were literally hundreds of Windows users who enjoyed Harmony, including iPod users who sent us their comments (see http://www.realnetworks.com/company/press/releases/2004/real_3million.html).
The campaign was successful because consumers really do want choice. We hired an independent research firm to ask internet consumers about this. 96% of portable device owner said they thought they should be able to move music they bought to any device, which gives us great confidence that we're on the right side of history.
10) Strategy Question - by Anonymous Coward
Strategically speaking, Real doesn't look to be in a very promising position. Its technology, once unique (RealAudio), is now ubiquitous. Its marketing has been, by any account of which I am aware, a disaster. Now it seems like there is no area in which Real has any real strength or over its competitors - RealMedia is eclipsed by Windows Media, iTunes rules the day in downloading and Microsoft is entering that market as well.
Rob, what advantages does Real bring to the table? What can Real do that no other company can do? Why does Real exist? What the hell are you doing?
Glaser:
Well, your question has more than a bit of a "when did you stop beating your wife" feel to it, but I'll address the core question, which is what are we trying to do and how are we doing.
Since many SlashDot readers don't necessarily read all the details of our financial statements, let me talk a bit about our business. 2004 is on track to be the biggest revenue year in our history. In the first half of the year we had sales of $125.9 million. Our second quarter sales were 65.5 million, which is 32% over our revenue for the same quarter last year. We ended the quarter with over 1.4 million subscribers to our premium services, including over 550,000 subscribers to our music services, both of which were records and make us #1 in the business.
In terms of our products, Rhapsody is not only #1 in subscribers, it also wins pretty much every review as the music service that is best and easiest to use. RealPlayer 10 was also PC Magazine's editors' choice and also many other awards.
Of course we have competitors if we were a monopoly you would have other reasons to criticize us. :)
Having said that, we're as different from our competitors as Yahoo is from its competitors. We're focused on creating services that deliver great experiences to consumers regardless of what platform they use. This is very different from either Apple or Microsoft, both of whom center their services on their proprietary platforms (Mac/iPod in Apple's case, Windows in Microsoft's case).
I started RealNetworks more than ten years ago because I believe strongly that the Internet can and will transform how people experience media, giving them unprecedented control over what audio and video they experience, and when, where, and how they experience it. While there have been many twists and turns along the way, we're very pleased with the progress we're making both as a company and as an industry. And we feel great about the opportunities in front of us.
With that, I'd like to that you all for your questions and for taking the time to read and think.
Best,
Rob
He wants Apple to let him install his music on the iPod, but won't let us install it on our Mac OS computers.
me 2!!1!
I was rather impressed. He answered every question, though occasionally obliquely to avoid portions of the question that are harder to put into a good light...
However, I will never install Real again, no matter what media I could see with it. The company has destroyed my trust in them in the past; and while they may no longer be deserving of unmitigated loathing, I cannot bring myself to trust them far enough to install them. Once bitten, twice shy.
Raven
"I will trust Google to 'do no evil' until the founders no longer run it." Hello Alphabet.
>Well, your question has more than a bit of a "when did you stop beating your wife"
/. knows, when your not so computer savy brother/sister/friend etc... asks you how to install real as they wanna hear some scratchy sound on the net and your response is NEVER EVER EVER install Real Player or anything with "Real" in its name... not EVER EVER. Never. You will just cause your self headaches... If you must install something, find an alternative. The Real suite WAS the closest thing legit commercial software got to being a virus or whathaveyou...
He beats his wife? For shame!
Seriously though if he wants to be sucessful Real has got to change their neferious ways of intrusive installs... As probably everone on
Noticed I said "WAS", and also notice that Glaser mentions some new verion of REAL... well I wouldn't know as I would NEVER (ever) download the stuff, such a bad impression was made upon me it will take a LONG time to regain credibility as a legit company.
anyway thats my rant.
The one fault they also seem to share is that they get geek speak, but I'm not sure they truly understand. IOW, they understand the promise of the really open market, but don't live and breathe it in their business. So they're better than many of the alternatives (like our dear MS Borg), but still aren't taking advantage of the full market they could get if they made that extra step and truly opened up...
FWIW, I've spent money with both companies in the past, and will do so again if Rhapsody ever does offer a Linux version.
Obligatory plug - please check out my online novel
Go for it. Real has really made some serious changes. I'm in bed with them again and loving it, and have been for a few months. This is after nearly 5 years of not even looking at their software. Now a days, their software is really really nice and polished (both in features and appearance), I use it as my main media player now, regardless of the platform I'm on.
Regards,
Steve
I've been a very happy rhapsody subscriber for a couple of years. They've done everything right. Good pricing, elegant interface, lots of additional artist information available, tight and fast performance, no ads, no spyware, lightweight, low overhead, etc. When I'm on a PC, it's playing music and never disrupts what else is going on, even with processor-intensive applications running. It just works perfectly and unobtrusively. Plus, their library is extensive and always expanding.
Naturally, when Real bought Rhapsody I got scared. Rhapsody uses WMP and Real is reportedly looking to switch over to RM. This could be good or bad. They can use a lightweight realplayer with rhapsody to send me tunes and easily add Linux and MaxOS support in the process, or they can use the current memory-consuming version of RP10 that doesn't run under Linux, and I'll cancel my subscription. The version of RP10 for Linux is much lighter than the Windows version, but ironically, they don't offer it for Windows.
I'm not real optimistic.
Tie these two together:
Our RealPlayer Music Store is a pure example of the second model. As part of our introduction of our Harmony technology (which allows digital songs to play on a virtually any popular MP3 player), we put every song in the store on sale at 49 cents. The promotion was a smashing success, resulting in us selling over 3 million songs in about 3 weeks.
and
While wholesale prices vary depending on the label, today most labels charge approximately 65-70 cents per song. Publishing costs a fixed rate of about 9 cents per song. And the other costs average a few pennies per song. Thus, as we have made clear, selling every song in our store for 49 cents a song is not sustainable unless/until the labels change their pricing philosophy.
That 3 million song block sold cost them between $810,000 and $960,000.
I have to wonder if they really get enough other new sales to offset losses like that. It does seem that they are making money, but some of that money is from premium services.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Uhhh, did you just miss the part where Slashdot said they'd do the same thing in his place? That's where they step beyond explaining his behaviour to justifying it; guess what folks, that ain't journalism.
Using that same logic, you could say "Since the driver in front of me ran the red light, I'm going to run the red light as well." Would you jump off a bridge because another person did?
Real may have gotten better at uninstalling in version 10. But why oh why are we at version 10 before the thing uninstalls cleanly? Why are we at version 10 before the adware in the "free" version (what a misnomer) is less offensive? Why are we at version 10 before the mime-type land-rush has stopped? That should have never gone into the product in version 1.0.
Pisses me off when software won't completely uninstall itself. There's nothing a good rm -rf shouldn't undo.
The one thing that makes me happy about Real is watching it succumb to the same forces that destroyed Netscape. Look at the parallels - a small company formed around a pretty innovative product. It awakens the sleeping Giant (in Netscape's case that was MS; in this case it's Apple and MS). Freaks out and spawns an "open source initiative" (Mozilla vs HelixCommunity's hxplay). Get ready to go the way of the DoDo bird, Real.
And take your damn spyware with you.
-c
Do it for da shorties
Not to beat a dead horse, but Real as a company seem to have some of the worst standards out there in terms of how they treat their customers.
Especially if, by customers, you mean "People who have been duped into installing Real's software package and can't seem to get rid of it."
I'm not so naive as to expect Realplayer to ask if it wants to uninstall every time it runs, but essentially, Real Networks lives off of cheap-shots, parlor tricks, and ignorance. I installed Real on a friend's computer *LAST NIGHT* and I still had to scroll down in the preferences box, past lots of UNCHECKED items, to get to the list of CHECKED items (previously hidden by the unchecked list) which say "Do you want Real to send you lots of annoying crap?"
Come now. That's not being open to your customers, that's being duplicitous and cheap. This guy should realize that.
For those who don't want to dig it out for themselves, here are the numbers and, yes, they are NOT profitable.
So Real wants Apple to open up licensing of iTunes DRM so they can undercut Apple on a non-Apple platform?
In other words, "We want you to let us use your DRM for our music store which won't run on your OS so we can compete fairly with your music store." Does that not make sense to anyone else?
My Other Computer Is A Data General Nova III.
Now, real Mac ISVs like Adobe, Wolfram, Stone Design, they're actually active and timely with updates.
Interesting that you include Adobe as a real Mac ISV. I think the Apple-Adobe relationship is a perfect example of the difficulties of being a Mac ISV, particularly for media software companies such as Adobe (and Real).
Notice that Adobe has dropped Premiere for Mac. Why did they do that? There are two reasons: First, like it or not, Windows has become an acceptable platform for digital video work, which makes it an important market for Adobe. Second, Apple decided to compete head-to-head with Premiere by developing the Final Cut Pro product. Perhaps they felt the need to do this to further differentiate the Mac from their PC competition once Premiere ran on both platforms, but the net result is that Apple pushed a top-tier ISV off their platform by shoving in to an already small Mac software market.
Being successful as a Mac ISV comes down to one thing: Can you sell enough high-margin software in the relatively small Mac desktop segment to cover your development costs and make a profit? Adobe Premiere is a very expensive, high margin product, and yet they abandoned the Mac after Apple started competing with them. Who wants to compete head-to-head with Apple on their own platform? Now look at Real. On the Mac, they're competing head-to-head with Apple on a product that they give away. Where's the business sense in that?! It is a wonder that Real makes a player for Mac at all.
Thanks for the post. We completely agree with you that credibility is earned, not claimed.
To the heart of your question, What has changed? Why would the company change? What motiviation does the company have to change?
First and foremost, our business model has changed. Today over 80% of our revenue comes from Consumer SERVICES. Services that our customers rave about to their family/friends. For example, RealRhapsody, our all you can eat music subscription service, is the number 1 rated music serice. Why buy songs when you can access over 700,000 for $9.95/mo. Another example is our STARZ! Ticket on Real Movies, which allows you to downloads as many feature films as you for $12.95/mo.
Second, our product development process has changed. Today, we build the heart of the RealPlayer nightly within the Helix Community. this process has allows us to have a tigher communication process with our users and developers. When we develop our products publicly, there is little room for non-essential features.
Third, actions must speak louder than words. As other posters have attested to. Check out he latest free RealPlayer 10 for Windows, Mac or Linux. If you don't think we have lived up to your rightfully high expectations, uninstall it. You can unstall everything. Its just that simple.
Finally change is hard. But I think you will find that we have changed on numerous fronts, for the better.
Kevin
Kevin Foreman
Hi folks,
I'm Rob Lanphier, and I'm the Development Support Manager for RealNetworks. Among other things, I'm responsible for guiding our Helix Community initiative.
I'm glad to see some of the good comments here. People are starting to see that things have have changed.
There's been some comments on ethics, and how a company "can never be trusted again" after making missteps. It's very frustrating for me personally because it belies a certain naivete about how companies and the world works, as well as the fact that the meme really limits the potential of doing some really great things. It also bugs me because, well, I like to think of myself as a very ethical person.
As Jamie Zawinski pointed out, you get a lot of people together, and stupidity inevitably ensues. It's practically unavoidable. However, there's also an upside to getting a lot of people together. Some things just take a lot of people to do.
We're building out an infrastructure for delivering music and other media to a lot of folks over the Internet, and building the partnerships with media companies and technology companies to pull it off. In the process of doing that, we're managing to build a lot of great technology that we're making available as open source, much of it even GPL
If we're successful in really getting the industry to rally around this infrastructure, not only will the world have a kickass open source media infrastructure, but we'll have shown other previously skeptical that it's not an utterly insane thing to do. However, if it doesn't work out, it'll be yet another counterexample of why building open source isn't compatible with the business world.
It's been really cool to see how the Helix Player/RealPlayer for Linux effort has gone. Our Freshmeat ranking continues to climb at a great pace, and we're seeing a lot of downloads. If anyone is worried about what's in that player, look at the source code. Hopefully, we'll be able to further roll that model of building software out to other parts of our business.
At the end of the day, companies are just people. You get a big enough group together, and you'll find there's good people, and there's bad people. I suppose you can lump us all together, and say that the group as a whole is bad. Or you can take the more pragmatic approach. Rally behind the good people in the group, and help them guide the rest down the right path.
Rob
I think all the personal angst stems from the fact that most of us grew up in the hacker subculture. Programs that install stuff on the sneak violate an unspoken code of ethics. Vendors that aggressively lock in with proprietary codecs and stuff are A Bad Thing(tm). We are used to going to open forums and *Flame On* writing long diatribes about how much they suxor and why. .. quicktime and realplayer.
These are the bad guys. They always have been the bad guys. They are now desperately trying not to be the bad guys. Apple and Real have been battling about online media for ages ! They were the two original players
Glaser acts like this is the first time they have butted heads.. Oh we approached apple, we wanted to make a deal. Bah that was just a show for the media. That is like osama and bush sitting down for tea. This war is in its second decade, and don't you forget it.
But I Digress........So, in conclusion, it is because we like to go onto online forums and talk about evil software that violates hacker ethics.
music lover since 1969
So now Real says Apple is being a bully, while they attempt to maintain a business model 100% based on bullying. When I say "Why shouldn't Apple do this?" Rob's honest answer might be "Because we would sue them, file a DMCA complaint, and do our best to smear them as hackers in the media." (Because Real can't break compatibility like Apple via an iTunes update. Their software is deployed.)And the way they did it was by building a competing implementation of another company's DRM system. So is that ok? Why shouldn't Apple do this?
There are no trails. There are no trees out here.
While everyone was busy screaming that Apple/Real rocks/sucks and making buffering jokes, most folks missed the truly inspired quote:
Based on the data we've seen, we think, long-term, the pricing that will result in the biggest overall market for music will involve some kind of tiered pricing new mainstream songs for 99 cents retail, and up-and-coming artists and back catalog artists at a lower price.
We are working with the labels to prove this to them. We think over time we will succeed, but it will take time. The more that customers support our efforts both directly (by voting with your wallets) and by communicating directly to the music industry, the better.
This is the most reasonable position that I have ever heard. Rock on Rob!!!
Thanks for the encouragement. When I have face-to-face conversations with folks (trade shows, Linux user group meetings, etc) this is usually the tenor of the conversation. It's usually only when people get online that people sport their tinfoil hats come out.
That's why I'm often told "ignore the Slashdotters". While I don't let it get under my skin, I have a hard time ignoring it outright, because that's the only exposure a lot of folks have to the hard-core technologist (read "geek") community. I, of course, say that as a geek who has been reading Slashdot/Chips-n-Dips since 1997.
What's interesting to me is that I wonder how many of these people are just as frightening in person as they are online, or if they are paper tigers. I suspect it's a little of both.
That leads to the followup question: how does the geek community take back this bullhorn from the most shrill among us?
Rob
2. Real entering the Apple market by supporting OSX (or other MacOS) customers is not as immediate a benefit for Real, as making a significant ROI would be like trying to push water uphill.
Helix player is open source and runs on linux right? It can't be that awfully hard to port it to OS X. If it's any good I suspect the fink guys will do it anyway.
Give me Classic Slashdot or give me death!
You've pretty much proven my point. Rather than looking at a corporation as a monolithic entity, you can look at it as a collection of individuals to influence one-by-one.
I'm not going to respond to the specific grievances you lay out. I could try to step up as a spokesman for the teams responsible for that stuff, but I'm not going to, other than to say the following. Most of these things have not affected me personally, and for the stuff that has, I've spent a lot of personal political equity complaining about to those folks. However, I think a lot of the charges against of are blown WAY out of proportion to what actually happened. But, I don't want to get into a big argument about that stuff, because it's not what I'm personally involved with.
What I'm personally involved with is a lot of great initiatives that should mean a lot to this community. Getting open source media playback on cell phones. Making the Linux desktop a viable alternative to Windows by providing world-class media solutions.
So, before continuing to prove my point by comparing a company to an individual, and then using the word "you" in a sloppy way as to possibly indicate you are making a personal attack on me, just think a little bit. You are entitled to your opinion, but you aren't obligated to share it. Keep this thought in mind: are the words you write really making the world a better place?
Rob
he was right.
:-) and Bittorrent, rather than trying to watch it buffering.
That question did have a 'What are you guys gonna do since you suck so bad?' feel to it.
He was dead-on in his assessment of the attitude of the question. Great answer.
I'm still not going to install Real on my computer (sorry, they fooled me once in '95, once again in '98. and I think I accidentally installed a version in '01). Now when I see a site that has streaming Real media, I mail their admin and ask if they have heard of Divx
+&x
I'm surprised nobody asked about Rob's purchase of the PBA (Professional Bowlers Association) along with a few of his tech-sector friends. Over the past few years they have gained a lot of ground in increasing the popularity of bowling and legitimizing it as a professional sport. Wired had a great article on it this month at http://www.wired.com/wired/archive/12.09/kingpin.h tml.
After watching the re-emergence of poker, I think that the PBA has a real shot of revitalizing bowling with the right marketing. Regardless of how I feel about Real, I'd like to see the PBA venture succeed.
--Josh