Neowin.net - Real's campaign pays off

Real's campaign pays off

Posted by Mr magoo on 24 August 2004 - 20:20 · 70 comments & 8198 views

Real Network's recent media blitz has paid off well. Real have announced that they've sold 1 million songs (49 cents / song) in the first week of operation. This has been mostly through their 'Freedom of Choice' promotion. Real's promotion was battered with abuse from a very vocal minority of Apple enthusiasts. On the whole, iPod users have much enjoyed the cheaper song prices; indeed, many didn't know of the DRM stopping them from buying from other companies.

Real claims that it's equivalent to the iTunes music store, Rhapsody, has 500,000 members, and that it's content can be played on over 100 devices. They claim to have 625,000 songs available for purchase / download in the AAC and (more critically) iPod compatible format. Real managed to reverse engineer Apple’s DRM technology to allow them to sell songs that will be compatible, and usable, on Apple’s popular iPod device. Very good news for Real, very bad news for Apple. Although initially mocked, Real might (excuse the pun) become a real competitor to Apple’s music offering. Apple have, up to this point, faced little to no serious competition in the online music market. There is a real possibility that this might change.

Apple is very dependant on their new music business, and serious activity could prove quite damaging to their bottom line and overal profit margin. They've already stated that they don’t make very much money on individual music sales (how much so, we can't be sure). The effect of a long running and successful competitor to their offering could be very damaging. What they could do to salvage the situation? They might be attempt to license 'Fairplay' (their DRM technology), and in doing so make up lost profits from that.

The 49 cent 'Freedom of Choice' campaign will uhndoubtedly cost Real dearly. However, there is the very obvious benefit of pinching Apple’s much needed customers. Whether they'll keep on coming over to Real after they cease the 49 cent campaign, however, is another matter. What will be really interesting to watch is Microsoft’s entrance to the online music market (expected imminently). Microsoft have negotiated individually with major record labels, and will have over 1 million songs to sell when launched – more than the number on sale by iTunes and Real.

View: Real | Harmony homepage

View: FreedomOfMusicChoice.org

View: Apple.com | iTunes

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(11 replies) #1 Posted by Huezo on 24 Aug 2004 - 20:22: Argh, damn Real. DIE!!!

(3 replies) #2 Posted by figgy on 24 Aug 2004 - 20:27: Repeat after me: 'The is no money in Online Music Stores'
Apple makes its money out of the hardware selling iPod.

#3 Posted by Varsity on 24 Aug 2004 - 20:27: Wow. If you want to sell stuff, just mention freedom! Or democracy! Or the US Flag!

Americans...

(1 reply) #4 Posted by electic102 on 24 Aug 2004 - 20:29: It has nothing to do with that Varsity, don't embarass yourself. IT has to do with .49 cents a song vs. .99 cents a song. But I dont liek real and will never buy or download any of their crap. And no, I am not an Apple user either.

#5 Posted by MEMO.INC on 24 Aug 2004 - 20:29: Excelet, competiton makes prices lower!!!

#6 Posted by Xabora on 24 Aug 2004 - 20:32: Saweet, this is really good news!

#7 Posted by Mister Lamar on 24 Aug 2004 - 20:33: Real is the company, VIVA real

#8 Posted by MaddogMDD on 24 Aug 2004 - 20:33: Sometimes it takes an a**hole company (Real) to keep good companies (i.e. Apple) from getting too fat n' happy. Competition is good, even if it is from Real. It'll only make Apple better and consumers happier.

#9 Posted by twinn233 on 24 Aug 2004 - 20:35: Freedom of Choice!? Not at all can you use it on a mac... no. There is no freedom of choice. They've just broken into Apple's iPod which is just wrong.

"Microsoft have negotiated individually with major record labels, and will have over 1 million songs to sell when launched – more than the number on sale by iTunes and Real."
Actually iTunes does have over a million songs selling on the iTMS

(9 replies) #10 Posted by Hurmoth on 24 Aug 2004 - 20:37: Real should die! KILL REAL!

(4 replies) #11 Posted by shao on 24 Aug 2004 - 21:45: But on the positive side, all these cheap-o music is costing real dearly. Aint that a shame!

#12 Posted by SimplyPotatoes on 24 Aug 2004 - 22:49: the real music service is great. i do dislike how i have to use a "hack" to get it to burn cd's when i have a cd mounted with alcohol 120%. that is pretty annoying, regardless the preview of entire songs is fantastic. there software is very fast for me and i enjoy the colors they have chosen, i couldn't be more satisfied with there products, as of now.

(4 replies) #13 Posted by oik on 24 Aug 2004 - 22:59: 1) surprising they haven't gone completely bankrupt at the loss they're taking selling songs for $.49
2) surprising 500k people even know real exists and is in the music download biz

#14 Posted by o83zero on 24 Aug 2004 - 23:01: Frankly, if I did buy music (people still do this nowadays?), I'd rather pay the extra 50 cents and support Apple, than support Real.

(7 replies) #15 Posted by tHeDoSe on 24 Aug 2004 - 23:08: who says they are open to competition? I call bullsh!t, if they are complaining about it ie: Fairplay, openness and accessibility then their software/website/online store should be!

(2 replies) #16 Posted by eilegz on 24 Aug 2004 - 23:20: well lets wait microsoft to kill apple and real with their msn music store included with windows media player 10

#17 Posted by nX07 on 25 Aug 2004 - 00:13: I agree with aristole-dude, even though I do not use nor plan to use the iTMS, I would hate for the current DRM system to be implimented into their store system. Hell, I have a hard enough time using other online stores thru DRM's.

#18 Posted by Mr Mialo on 25 Aug 2004 - 00:40: Now if only fuel prices could get cheaper instead of more expensive!

(4 replies) #19 Posted by phkhoury on 25 Aug 2004 - 02:16: For those who still don't know, AllofMp3 is the best

allofmp3

#20 Posted by aboi on 25 Aug 2004 - 06:06: well to tell you the truth i support real on this one. altho i dont use their store. i think a little compitition is a good thing.

#21 Posted by belto on 25 Aug 2004 - 08:58: i am about to cancel my subscription with realplayer.

#22 Posted by ACTIONpack on 25 Aug 2004 - 13:27: I can't believe apple users start a partion to stop Real to offer AAC songs for ipod to download. They always says they want choices but when some other companies it that is not Apple it's bad and wrong. That's why Apple will never compete with Microsoft or any other company. They say one thing and do the complete opposite. Just like the Apple commerical what was shown on SuperBowl.

Anyway back to want I was going to type about. I was talking to a apple website writer about how Real sold 650,000 songs in the first week. I mess up it was really 1million but back to my point. And he said it does not matter when songs goes back up to there normal price people will not using it and go back to iTunes because it's better and the company has loss money when doing this thing. What this does not gets me that every company that start something will loss money in the beginning but other time they will get it back. Real will loss custmers when the price goes to 99 or 88 cents. What ever the normal will be but people will stay with Real and iTunes will loss money because of Real.

(2 replies) #23 Posted by Judge Roy Bean on 25 Aug 2004 - 19:40: (Rather than stick two or three replies into the middle of several rants, I'll just hit it all at once, here.)

Easy to see that none of you are business people. A few of you have actually hit close to the head of the nail by stating, "it's the licensing fees", but that's still off-base by a little bit more than you realize.

Having seen this very kind of thing in my former life, I can tell you that there are costs, and then there are costs. First topic up for inspection is, where did that $0.70 per track come from? Sounds to me like it was PFA (Plucked From Air). Any reliable sources for that figure?

Second, why wouldn't there be volume discounting? Nobody engaged in commerce over the last 100 years has done any business without that magical lure of discounts for volume purchases, thus making even bigger profits possible.

Third, who says that the online stores are reporting accurate figures?! This is where I have a bit more knowledge than the average Joe about what goes on in the real world (pun definitely not intended). It should go without saying that no one, repeat - no one - can access the true sales figures unless the seller gets a huge dose of honesty. To put it politely, keeping more than one set of books, particularly where download logs from the server are involved, is just too attractive an option to resist. You know the old saying, "It's only wrong if you get caught."

So much for business, now to address other concerns, small as they are.

Like some of you, I don't give a rip about who's who. As far as I'm concerned, a rotten apple is still a rotten apple, no matter how many fan-boys defend it - that just proves that their taste buds have atrophied beyond repair. And I wasn't picking on Apple, the corporation - at least, not exclusively.

In my former life, I had to give people the benefit of the doubt as much as possible, so I'm willing to cut Real some slack here. Why? Easy. Ask yourselves "Why do I hate Real so much?" The answer to that is easy, too. You hate them because they put out crappy software, at first for free, then they had the balls to charge for it, even though it was still crappy. And to top it all off, they invaded your privacy. You may also have issues with their beguiling the Justice Department, vis-a-vis Microsoft's position as the BMOC, but that's small potatoes.

So why not let them metamorphose into something else, say.... an online music store. If they can fairly kick butt there, then I say, more power to them. If they get caught with their knickers down around their ankles, then too bad for 'em.

And last but not least, anybody wanna hazard a guess as to how many Mac's there are in the world, versus how many iPods? Any business majors out there who can outline in 50 words or less why the Mac isn't supported, and why it probably won't be, unless by accident? Freedom of choice doesn't mean "universal freedom" for the tiniest willy-nilly fraction of the market, no matter how vocal that vast minority might be. Freedom of choice simply means "there is at least one alternative", and that's all it means. At least, that's all it means in the English language. I can't be held responsible for how non-English speakers feel about any translations into their native tongues.

My summary judgement is that you should all re-read Reply 2.2 (by digistil). Question everything you read/see/hear/smell/touch. Then question it again.

So decrees.....

Da Judge

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