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Commentary: RealSystem, real promise

RealNetworks says that its new distribution system for digital content is a win-win proposition for both consumers and copyright holders.

By P.J. McNealy, Gartner Analyst

RealNetworks says that its new distribution system for digital content is a win-win proposition for both consumers and copyright holders.

See news story:
RealNetworks pushes copyright initiative
The RealSystem Media Commerce Suite certainly seems promising, with an architecture that appears to offer seamless, user-friendly access to content for consumers and fair compensation for copyright holders.

The system's architecture is designed to deliver both digital content and a flexible digital rights management (DRM) system in a coherent fashion--and to assure rights holders that when digital content is put up on the Internet, it will not be shared illegally forever. Both the recording and film industries have been looking for this level of trust for a very long time. Some important questions remain, however.

Will it work?
RealNetworks has the in-house network and system architecture expertise to make a system like this work. That expertise will unquestionably be put to the test, especially in the critical effort to make the system work with handheld devices, such as MP3 players. Today's MP3 players lack the internal clocks or calendars that help make timeout locks for digital content work, so any content on the device may be unsecured. RealNetworks will have to work closely with MP3 device manufacturers such as Sonicblue, Creative Labs, RCA and Sony to ensure that the downloaded music from MusicNet can be transported securely and cleanly to the handheld devices.

What's in it for the copyright holders?
If this system is to be widely adopted, holders of copyrights (for films, music or other forms of digital content) will have to have the flexibility to pick the DRM implementation they prefer. RealNetworks appears to understand the importance of this issue because it would allow other DRM providers, such as InterTrust, IBM, Liquid Audio and Microsoft, to offer their own products and services.

What's in it for consumers?
If RealNetworks succeeds in convincing copyright holders that its system can be trusted, there will inevitably be more digital content available for purchase on the Internet. This could produce various results, such as films being available for purchase on the Net much earlier than expected--as early as this year, in fact. Another benefit may be unique promotional programs--for example, consumers could buy a box of cereal with a special offer that allows them to listen to the new Dave Matthews Band album once before deciding whether to buy it.

What does this mean for Napster?
MusicNet will be using this architecture from the outset, which means that AOL Time Warner, and Napster will be using it, too. The consequences for AOL and RealNetworks will be fairly straightforward because they have no other music content offerings at the moment.

For Napster, however, the Media Commerce Suite presents a real challenge. Napster already has licensing deals with independent artists and labels, so it must either pour that content into the Media Commerce Suite or allow the non-MusicNet content to exist in a second distribution system--a secure, peer-to-peer network with filtering.

Reconciling the architecture of two systems and giving consumers an easy-to-use interface will be difficult, given the announced launch date of late summer or early fall. For that reason, and because Napster has yet not demonstrated effective filtering techniques to MusicNet, AOL and will likely launch MusicNet services ahead of Napster.

(For related commentary on the streaming media competition between RealNetworks and Microsoft, see registration required.)

Entire contents, Copyright ? 2001 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.