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AOL reinforces relationship with RealNetworks

The company's decision to use RealPlayer 8 in its internal network gives America Online more control over video and audio streaming. The deal also lets RealNetworks thumb its nose at Microsoft.

America Online today said it has beefed up its internal network of computers with RealNetworks' audio and video streaming software, a move that tightens the bonds between the two companies.

AOL is adding RealNetworks' RealServer 8 software inside its internal network of servers. The arrangement gives the Internet service provider more control over how it manages video and audio streams on its service, AOL spokeswoman Wendy Goldberg said.

"We deliver interactive services at such a large scale that we need the infrastructure," she said.

RealNetworks develops software that gives people access to audio and video via the Web. Content providers, such as radio or TV stations, use RealNetworks' technology to deliver their programs. The company also produces an audio and video streaming player that Web users can download off its site.

Web streaming has become a popular feature on the Internet and is largely considered a key to melding traditional and new media. Its popularity has attracted the attention and efforts of other technology giants, most notably Microsoft and Apple Computer. Both have developed media streaming technologies--Microsoft's Windows Media and Apple's QuickTime--that compete with RealNetworks.

Today's deal comes amid an ongoing battle between RealNetworks and Microsoft over technology market share. The companies have wrangled for years. Microsoft has competed aggressively with RealNetworks, building Windows Media into its Windows operating system and courting content providers to use its technology.

"It's been clear for a long time that they have a common enemy, and they now have to circle the wagons," Aram Sinnreich, an analyst at Jupiter Communications, said of AOL and RealNetworks.

Microsoft has also lured some big names to its roster of Windows Media users. Last month, Web portal Yahoo unveiled its own media player developed with Windows Media technology.

Today's deal allows AOL to offer RealNetworks' technology on its Netscape browser and Netcenter Web portal. In return, RealNetworks has agreed to include AOL's Web radio service, Spinner, on its RealPlayer software.

In addition, the companies said they will develop a media player using RealNetworks' technology for AOL 6.0, slated for release later this year.

The companies' relationship began in 1998 when RealNetworks inked an agreement to distribute its software through AOL. The deal allowed RealNetworks to become the default streaming provider on AOL's 4.0 software, an arrangement that continued when AOL launched version 5.0 last fall.

In May, AOL said it would begin using RealNetworks' streaming technology to deliver high-speed multimedia content on its AOL Plus broadband offering. AOL Plus is a feature in the online service that turns on when it detects a member accessing the service with a high-speed connection. AOL Plus offers video and audio streams from its partners.