The Format Wars
By Sara Robinson, Interactive Week
April 23, 2001
When RealNetworks announced earlier this month that it was starting MusicNet, a music subscription service, as a joint venture with three major record labels, Rob Glaser, RealNetworks' CEO, said he would be happy to open the service to the music players of rivals — including Microsoft.
Glaser could afford to make the magnanimous gesture because such a move would only benefit his company. RealNetworks makes money by selling streaming media servers, and it creates demand for those servers by distributing its music player. Similarly, Microsoft tries to lock users into its own media format with the aim of selling more server operating systems (OSes). What Glaser was offering was an opportunity to allow Microsoft's free media player to serve RealNetworks' content.
Is Microsoft eager to accept Glaser's offer? In short: No. Dave Fester, general manager of the Windows Digital Media Division, gives this carefully worded reply: "We would be happy if RealNetworks embraced Windows Media in the MusicNet service. They have not approached us about this, but we are open to discussing with them the options for including Windows Media support in their service and how it would be implemented." In a swipe at RealNetworks, Fester adds: "It would be of significant mutual benefit for consumers and the industry for RealNetworks to use the best audio quality and security available for digital music distribution."
Welcome to the streaming media format wars. This exchange over MusicNet is only the latest sparring in the battle over proprietary media formats. To lock up the market, RealNetworks and Microsoft do their best to ensure that streaming audio and video content is delivered by their servers, and preferably in their own proprietary formats.
But as RealNetworks and Microsoft slug it out, other companies are complaining that the fight benefits neither content producers nor consumers. The solution, these vendors say, is to adopt the open MPEG-4 format, a new audio and video encoding standard from the International Organization for Standardization.
Apple Computer, Cisco Systems, Kasenna, Sun Microsystems and other companies formed the Internet Streaming Media Alliance late last year to promote an interoperable specification around MPEG-4. The alliance, to date, has attracted more than 60 participants.
Now that streaming media is becoming big business, alliance members say, it's time for an open standard that will make it more efficient and economical.
"The momentum for MPEG-4 is growing, and the reason is that streaming is coming of age on the Internet and moving beyond the phase of proprietary solutions," says Rob Glidden, Sun's market development manager for broadband and digital media.
Greg Carter, director of business development at Kasenna, concurs. "Microsoft used to have their own e-mail server and client, but that didn't last long," he says. "Proprietary standards don't tend to survive."
While RealNetworks and Microsoft both use the ubiquity of their media players to sell their servers, the companies have different business models for their media operations.
RealNetworks' server software runs on multiple OSes, and the company says it supports multiple streaming formats in RealPlayer, though not Microsoft's format. In any case, non-RealNetworks formats must be recognized by RealNetworks' auto update server in order to play on Real Player, which ensures that rivals' servers can't de liver content to its player.
Microsoft, on the other hand, uses its media technology to promote its OSes. The company gives its media server software away for free, bundled with copies of Windows NT or Windows 2000, the only OSes it runs on. The company does not support RealNetworks formats. But similar to RealNetworks' products, streaming content that plays on Microsoft's Windows Media Player, which is also bundled free with Windows desktop OSes, must be streamed from Microsoft servers.
Microsoft acknowledges that it uses its media player to promote the sale of Windows NT and Windows 2000 servers. "We are in the business of selling server [OSes], and we do want to protect that business," says Michael Aldridge, lead product manager in Microsoft's digital media division. "We have a very open approach relative to [RealNetworks], but we are in the business of selling servers."
RealNetworks takes a comparable stance. Ben Rotholtz, RealNetworks' general manager of products and systems, suggests that if the company allowed another type of server to stream to its player, that would degrade the user experience. All the advanced capabilities of the RealSystem architecture, he says, are "key to regulate the server-client experience so that they can throttle together."
Restricted Access
caught in the crossfire are other multimedia software developers and content producers. To get around RealNetworks' and Microsoft's restrictive licensing practices for their media software development kits, companies have resorted to various tricks. One stratagem is to create a small client program that fools the RealNetworks or Microsoft media player into thinking the file is being delivered by the HyperText Transfer Protocol — which both players support — when it's actually coming from a third-party streaming media server.
If the ISMA succeeds in establishing MPEG-4 as the standard for online multimedia, these companies could opt to simply use MPEG-4. The alliance is developing open specifications that will let any company build a media player or server and know that their products will be inter operable with everyone else's.
For now, content providers complain that they have to buy both types of servers to stream to the largest possible audience, and third-party companies developing delivery systems say they have to get licenses from RealNetworks and Microsoft to integrate their product with the most popular media formats.
RealNetworks and Microsoft, however, claim that Webcasters and other companies want to use their formats and delivery systems, since — according to RealNetworks and Microsoft — the MPEG-4 standard is behind the times.
"We've gone several generations beyond MPEG-4," Microsoft's Aldridge says. "Our customers say, 'Hey, we want better quality and smaller file sizes.'" He also notes that MPEG-4 will still require a software developer to obtain a license from various patent holders, but those licensing terms have yet to be decided. In addition, it's not clear which companies even hold patents relating to the MPEG-4 standard, though Microsoft claims to own at least one such patent.
RealNetworks' Rotholtz also claims his company's proprietary formats are far superior to MPEG-4. He goes on to dismiss some of MPEG-4's advanced features: "The specification contains so much academic over-refinement that's not practical," he says.
Rotholtz also says he was previously unaware that the main push behind MPEG-4 comes from companies frustrated with the proprietary multi media formats. "We talk to those people, and they aren't banging their fists on the table saying, 'We need MPEG-4.' There's nobody that's doing that."
Growing Demand
but members of isma, at least, have been banging their fists — and judging by the group's growth rate, others are listening.
Sun's Glidden says the demand for open standards is quite strong in two areas. One is to promote competition in the market by ensuring that there are multiple vendors for each component of a streaming media system. The second area, Glidden says, is in the emerging array of hardware devices that can play Internet audio and video. Consumers can download free players to play different types of media on a PC, but makers of devices like set-top boxes and cell phones must pay licensing fees to play RealNetworks- or Microsoft-formatted content. "People are investing millions of dollars in these services," Glidden says. "They can't afford to base those services on a proprietary product that may change tomorrow."
As for the patent-licensing issues with MPEG-4, Glidden says the International Organization for Standardization requires licensing of patents that are employed in its standards to be fair, reasonable and nondiscriminatory.
"Supporting multiple solutions is quite expensive," Glidden says. "The question is: Who benefits from the format wars? Do content owners? Do network operators? Do consumers? It seems to me the only beneficiary is particular vendors with proprietary solutions."
