Real teams with Warner for music downloads

Warner Music Group--one of the "Big Five" record companies, along with Sony Music, EMI, BMG, and Universal Music--plans to offer songs for download from popular artists via the new version of Real's Jukebox player, released today. The downloads, from artists including Jewel, Edwin McCain, and Vitamin C, will be available on the Trans World Entertainment e-commerce site, the companies said.

The deal comes as a number of record companies are experimenting with distributing music online. In June, for example, EMI Recorded Music signed on music technology firm Liquid Audio to encode its music in both the Liquid Audio and Genuine MP3 formats. In addition, Sony Music began offering its content for download at brick-and-mortar stores through a deal with kiosk maker and infrastructure provider Digital On-Demand.

All the moves are designed to meet the growing demand for downloadable music. Ratings firm Media Metrix today released a study that said usage of online music players in the United States has jumped nearly 400 percent from June 1998 to 4 million monthly users. Real said more than 7 million people worldwide are using its RealJukebox player, which was released in May.

"RealJukebox has had the most successful launch of any new unbundled product we have seen in the three and a half years we have been tracking software usage," Bruce Ryon, senior vice president and chief technology analyst for Media Metrix, said in a statement.

But Real faces stiff competition in the emerging market for online music delivery, especially as accessing music online begins to gain mass market appeal.

John Powers, an analyst with BancBoston Robertson Stephens, who has a "buy" rating on RealNetworks, pointed out that America Online--which rules the new-Net-user market with nearly 18 million subscribers--distributes Real's technology. However, AOL in June bought Real competitor Nullsoft, maker of the popular Winamp music player.

In addition, a number of big players have increased their efforts in the music technology market of late, including Microsoft and AT&T, which offer the Windows Media Player and the a2b Music format, respectively.

Moreover, music companies other than the Big Five are actively seeking to gain online users with a wide array of music offerings. As more of those deals come to fruition, the brands of companies offering technology and those with content stand to become further diluted. All of these companies are positioning themselves to compete for the eyes, ears, and dollars of consumer audiences.

For example, both Sony Music and Viacom are planning to launch big music hub sites in the next month or so. And Viacom property MTV Networks Online already is looking beyond the desktop computer; last month it took a stake in Diamond Multimedia subsidiary RioPort.

Part of that deal involves RioPort creating the infrastructure for MTV Networks Online's properties to offer secure music downloads. With RioPort's connection to Diamond, maker of the Rio portable music player, MTV Networks is looking for the ability to offer consumers music and other related content such as interviews and music news via another channel they have demanded: portable devices.

One of the advantages of Real's product vs. those of its competitors is that it supports multiple formats, including MP3 and Liquid Audio, Powers said.

In addition, the deal with Warner "highlights what a hybrid play Real has become," Powers said.

"Real is a classic Internet hybrid, with technology elements, with branding and consumer experience elements, with portal characteristics," Powers said. "It gives them a lot of flexibility in a world where nimbleness is a prerequisite."