Gracenote finds its place on RealOne

The deal extends RealNetworks' license so it can include Gracenote's software in its RealOne Player for devices ranging from car stereos to digital jukeboxes. Gracenote's software, dubbed CDDB, recognizes songs listed on CDs and allows applications to display their titles as well as album art and reviews, music news, biographies, and tour information.

For Gracenote, the deal underscores its latest effort to reach consumers everywhere. The Berkeley, Calif.-based company is aiming to place its service into every home, MP3 device or CD player in the next five years. So far, Gracenote's services have been offered in products such as Pioneer's car stereo, Compaq Computer's iPaq, and MP3 jukeboxes from Hewlett-Packard and Kenwood.

Gracenote, however, faces daunting challenges in its goal of offering its service offline. Some analysts said people may have limited interest in the company's services, since many are more accustomed to listening to music via their electronic devices rather than sifting through artist or music information on a screen.

Still, Gracenote has been successful in signing up significant partners such as RealNetworks and music services provider MusicMatch. With Tuesday's announcement, RealNetworks will be able to offer Gracenote's technology to third-party developers and distribute Gracenote's recognition service and database in electronics devices.

For RealNetworks, the deal is part of its ongoing efforts to take a lead in the digital music industry. RealNetworks and Microsoft have been competing to capture compelling content, such as music from the big record labels, among other things.

Robertson Stephens analyst Sasa Zorovic said that while the Gracenote deal offers music fans an added service on the RealOne Player, it is unlikely to affect its standing against Microsoft.

"The more features that RealOne has, the better it is," Zorovic said. "But the battle is being fought at a much different area. It's being fought with content owners: Who is really able to get the content owners to put their content in their format?"

Zorovic added that the battle is also being fought on the PC platform. He said RealNetworks has managed to "hold ground against Microsoft" on that front even though Microsoft has been integrating its player software with the operating system for five years. Zorovic said content encoded in the RealNetworks format is offered on four times as many Web sites as Microsoft-encoded content. In addition, Zorovic said about 85 percent of streaming content is encoded in the RealNetworks format.

RealNetworks is also expected to reach 1 million subscribers for its RealOne SuperPass subscription service by year's end, thanks to a host of factors such as additional premium programming efforts and the increase of broadband penetration, according to a report released by Zorovic last month. RealOne SuperPass, launched three months ago, lets people who pay between $9.95 and $19.95 per month access premium content, including sports, news and entertainment.

RealNetworks, however, considers its deal with Gracenote a significant advance. Its previous deal with Gracenote only allowed RealNetworks to use Gracenote's technology for the Real Jukebox.

Gracenote's technology "adds a great enhancement feature (for) the consumer," said Lisa Amore, RealNetworks' director of consumer public relations. "It automatically gives (people) additional information about the music that they're listening to. It allows them to know everything from the song title to the artists to comparable music."