AOL's New Music Plan May Be a Real Threat
Rob Glaser and AOL: on the outs?
FORTUNE
Monday, July 8, 2002
By Fred Vogelstein
Ever since Rob Glaser left Microsoft in 1994
to found RealNetworks, he has lived life as
a fly in the ointment. That isn't meant as a
slight. Anyone who has competed
head-to-head with Bill Gates knows that
being tenacious, scrappy, and a little
annoying are prerequisites for survival. His
perseverance has paid off: Today, when it
comes to listening to music or watching
video online, there are basically only two
ways to go--Windows' Media Player and
Glaser's Real Player.
A big part of Glaser's survival has been
Real's close relationship with AOL (which like FORTUNE is owned by AOL
Time Warner). But that relationship may soon be headed for divorce court.
Why? Real is beginning to resemble a competitor rather than a partner.
RealOne, its latest offering, is a multimedia subscription service that looks
just like AOL and uses Microsoft's Internet browser, not AOL's. Worse yet, at
$9.95 per month, the service is cheaper than AOL, and for broadband users
it's sometimes better. After only six months RealOne has some 700,000
subscribers, while subscriber growth at AOL's flagship service is slowing. In
addition, AOL pays Real some $6 million a year to license its software. Yet
AOL techies say privately that they never liked Real's technology very much.
To combat the Real threat, FORTUNE has learned, AOL has been quietly
developing its own music player using a set of audio and video standards
called Ultravox and .nsv, developed by Nullsoft and others. (Nullsoft, founded
by wunderkind and WinAmp creator Justin Frankel, was snapped up by AOL
in 1999.) What AOL plans to do with all this is still unclear; neither AOL nor
Real would comment. Its goal could simply be to use the standards as a
cudgel to get Real's and AOL's interests more aligned. But industry watchers
bet that AOL has much bigger ambitions for the project, such as replacing
Real's technology with its own in future versions of AOL's software and using
its heft to undercut Real's deals with content providers. There is even
speculation that AOL plans to use these standards to make its prodigious
music, movie, and video libraries off-limits to anyone not using the player.
Of course, if other music and movie companies don't play along, the gambit
could fail badly. But years ago, when e-mail was in its infancy, AOL's
proprietary setup was a key driver of its growth. Whatever AOL's intentions,
it's clear that another round in the online music wars is about to get under
way
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Texas Instruments licenses new MP3Pro
By Gwendolyn Mariano
Staff Writer, CNET News.com
September 19, 2001, 6:10 PM PT
Texas Instruments said Wednesday that it has agreed to support a new digital music format that creates files using half the space previously required for MP3s.
Texas Instruments said it is licensing Thomson Multimedia's MP3Pro format, which compresses standard audio tracks without significantly compromising sound quality. Manufacturers will be able to support the new format by updating their Internet audio devices using Texas Instruments' DSPs (digital signaling processors), which handle audio and video compression in real time.
"It makes sense that TI will support it. They support everyone, and so it was a matter of time before they supported it to show how flexible their DSP is," said P.J. McNealy, a media analyst for GartnerG2, a division of research firm Gartner. "But I don't necessarily see hardware manufacturers or consumers demanding support for this because there's so many codecs out there and this one isn't leaps and bounds better than the rest."
Forthcoming music-subscription services such as Pressplay and MusicNet, which are backed by the major record labels, have yet to adopt MP3Pro. They have instead struck deals to use rival digital music formats from companies such as Microsoft and RealNetworks. Until label-backed services pick up MP3Pro, there's not going to be "screaming demand for it," McNealy said.
Still, Thomson Multimedia and the Fraunhofer Institute, the companies behind the digital music format, have been interested some software and hardware developers in the new technology. MP3.com signed on last week to make songs available in MP3Pro on a joint Web site with Thomson. A new plug-in for AOL Time Warner's Winamp online music player is also available from various Thomson sites. In addition, InterTrust has integrated MP3Pro with its digital rights management platform, Thomson said.
Launched in June, MP3Pro includes a new player and "ripper," or file creator, which enables music fans to create near-CD quality digital music files around half the size of the previous format. In addition, MP3Pro files will work with software and devices based on MP3, Thomson said.
MP3Pro files are recorded differently from the previous format, however, and the new files may sound worse on systems designed for standard MP3s. MP3Pro uses two separate streams of data to improve audio quality; only one of those streams can be detected by older players.
Support for the MP3Pro by Texas Instruments "is instrumental in helping us expand our reach to portable Internet audio devices and will help to carryover the momentum of MP3 to the more advanced MP3Pro," Henri Linde, vice president of new business, patent and licensing unit for Thomson Multimedia, said in a statement.
Research analyst Susan Kevorkian of IDC agreed that to keep sales high it's important for consumer electronics manufacturers to build devices that support an array of the emerging file formats.
