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Statistics firms revisit QuickTime counts

New numbers from Nielsen/NetRatings could help Apple Computer push the multimedia industry toward MPEG-4.

Apple Computer is close to vindication in a long-running dispute with Web researchers over the popularity of its QuickTime multimedia technology--a victory that could help speed adoption of new digital video and audio standards.

QuickTime laid the groundwork for bringing multimedia to the PC in the early 1990s and has been a favorite digital authoring tool in professional production studios for years. But on the Internet it has battled a perception problem, based partly on Apple's small PC market share and statistics that consistently portray QuickTime as an also-ran in a race dominated by rivals Microsoft and RealNetworks.

The tables may be turning, however. On July 1, Web statistics giant Nielsen/NetRatings is scheduled to release research based on new counting methods that will result in a sharp increase in QuickTime's market share compared to earlier reports. Media Metrix, meanwhile, the other major Web measurement firm, said it plans this month to phase out its reports on the usage of Internet media players and to evaluate how it will measure market share in the future--a move that could also raise Apple's ranking.

The changes will likely leave RealNetworks and Microsoft at the top of the heap, but they could give Apple a credibility boost as it stakes out a role as an industry advocate for digital technology based on the emerging MPEG-4 standard. According to one source privy to an early draft of the Nielsen/NetRatings study, QuickTime's home usage jumped fourfold in April 2002 under the new methodology compared to the last time the company published similar research in December 2001.

Jarvis Mak, senior Internet media analyst for Nielsen/NetRatings, declined to discuss specific numbers in the pending report, saying the data is still being refined. He confirmed that Apple's share will increase but emphasized that the change reflects the new methodology rather than a sudden jump in QuickTime usage.

"We (saw) we needed to change our methodologies and that we needed to release a new report that more accurately reflects what's going on in the market," he said.

Despite their well-documented flaws, Web statistics have long been used as a key weapon in Internet marketing wars, and Apple is looking to expand its arsenal these days as it launches an offensive on behalf of MPEG-4, technology for video and audio delivery backed by the Moving Picture Experts Group, an industry standards body.

Apple needs all the help it can get. While it has won rave reviews for some of its latest products, it has stumbled in the sales department, warning Tuesday it would miss its earnings estimates for the current quarter.

The sales slump adds new urgency to the company's digital media plans, which hinge on pushing the entire multimedia industry toward MPEG-4. Its preview release of QuickTime 6--its newest multimedia system--is based on the format.

The company has also placed a big bet on digital media with popular products such as its iMac, its iPod MP3 player, and its suite of free media tools for the desktop: iTunes, iMovie and iPhoto.

In addition to targeting the consumer market, Apple is beginning to court enterprise customers with its new, rack-mountable Xserve hardware and with more powerful tools for digital media, bolstered by recent acquisitions of high-end technology for video production.

The pending Nielsen/NetRatings report underscores Apple's increasingly aggressive stance in the digital media arena. According to Mak, Nielsen/NetRatings' methodology switch stemmed in part from Apple's lobbying efforts to raise QuickTime's profile in the Web community.

Mak said his company stopped publishing statistics in January while it reviewed its methods following conversations with Apple engineers and others. Among other things, the new report will cut out large numbers of files that Nielsen/NetRatings now deems superfluous. Since QuickTime was associated with the least amount of files, he said, Apple's market share is expected to be larger in the new report than it was in the past.

Apple said it has also been in talks with Nielsen/NetRatings' rival Media Metrix to revise its methodology for calculating market share of media players. Media Metrix, the former Jupiter Media Metrix division that was recently sold to ComScore Networks, has published reports in the past showing QuickTime with a relatively tiny share of the active market for Internet media players.

Those findings were reiterated in its most recent report for the first quarter of 2002. The company reported in April that QuickTime reached about 12 percent of the Internet population at home, or a little more than 13 million people. In contrast, RealNetworks led in popularity, reaching 29 percent of the market at home, while Windows Media reached 28 percent.

A Media Metrix representative said the company talks regularly with its clients, including Apple. He also confirmed it is considering ways to improve its methodology for future reports.

Apple has long argued that both Neilsen/NetRatings' and Media Metrix's numbers are flawed. For example, Media Metrix until now has counted media usage based on files accessed from standalone applications--a statistic that leaves out files accessed from players embedded in Web pages or launched from browser plug-ins. Apple claims that many Web developers choose to embed its product more than other players, leading to significant undercounting for QuickTime.

Although it's unclear where the reform effort will end, the pending switches raise serious questions once again about the accuracy of Web statistics--a debate that will likely rage despite efforts to improve methodology. Both Nielsen/NetRatings and Media Metrix poll panels of Web surfers to create usage baselines, and then extrapolate those numbers to match usage for the Web community at large. The numbers are routinely challenged for inaccuracies, partly because of the small sizes of the panels, particularly outside the United States.

Apple won't be the only company to see a change with Nielsen/NetRatings' new numbers: According to an early draft of its report, Windows Media was the most popular media player in workplaces in April, with 63 percent market share--a more than 100 percent jump since the December report. It was followed by RealNetworks, with 60 percent, and QuickTime, with 29 percent. At home, RealNetworks led with 60 percent market share, followed by Microsoft's Windows Media at 53 percent and QuickTime at 28 percent. (The numbers add up to more than 100 percent because many people use more than one player.)

The rankings could soon be roiled again: Nielsen/NetRatings has promised another report tracking player usage for later this year that it says will provide even more accurate data.

Leading the charge for MPEG-4
The recounting comes as Apple is aiming to thrust its media delivery formats to the forefront of Web audiences, hoping to recover ground lost to rivals during the Net's boom years.

Appearances have become increasingly important to the company as it looks to become a leader on industry standards for streaming media. In recent weeks, the company has been aggressively pushing MPEG-4. According to analysts, Apple would benefit enormously if the standard is adopted and widely implemented.

"When you look at this whole movement to bring high-speed bandwidth (to the Net), and as a result higher-quality video, then you push toward a place where QuickTime and its support of MPEG-4 allows Apple to be in a leadership position again," said Tim Bajarin, president of consulting firm Creative Strategies.

Though the company was the first to introduce media technology for the desktop, Apple's QuickTime fell behind in the late '90s amid tough financial times and a management shakeup at the computer maker, Bajarin said. At the same time, RealNetworks capitalized on the mushrooming Net economy, becoming the front-runner in offering consumers a video and audio player for the Web and selling content publishers the servers to compress those files. Microsoft also seized the opportunity to piggyback media services onto its server business and quickly gained significant market share.

The Web traffic numbers illustrate the race.

Nielsen/NetRatings' report for December 2001 showed that QuickTime reached about 7.4 million people at home, or 7 percent of the Internet population, and 5.5 million at work, or nearly 14 percent of the Web universe. By contrast, RealNetworks reached some 32 million at-home users, or nearly 31 percent of the Web population, and 16.3 million at work, for almost 41 percent share. Windows Media hit 14.6 million at home, for about 14 percent reach, and 9.9 million at work, for about 25 percent reach.

Those numbers were calculated by looking at the file types accessed rather than the players used to access them. Under this method, each ".mov" file scored a hit for Apple; ".ram" counted toward RealNetworks' total; and ".asf" went to Microsoft.

While this method had simplicity on its side, it created distortions, Apple engineers argued. For example, RealNetworks typically uses several background and supportive files along with the main media file, leading to over-counting for its results.

Under the new method, these files are no longer included.

Nielsen/NetRatings bases Internet media player usage on so-called streaming media, where video and audio are delivered in real time, as well as on downloads, where consumers first retrieve a file from the Internet and access it later from the desktop. The distinction between streaming and downloads has blurred with the introduction of high-speed Net access, but streaming has remained popular among copyright owners, partly because it gives them greater control over their content.

The statistics firm's new report will also break down audio and video streaming vs. animation and images--a change from previous reports. But the report only tracks the proprietary players and not industry-standard files such as MP3 or SMIL--a factor that hurts companies that support them, such as Apple and RealNetworks. Eventually Nielsen/NetRatings plans to track nonproprietary formats as well, Mak said.

RealNetworks would not comment on an early release of Nielsen/NetRatings numbers. But a representative said the company remains the streaming media leader despite any changes to Nielsen/NetRatings' methodology.

"They changed the way they count," said Steven Banfield, RealNetworks vice president of strategic relations. "We've been in a leadership position, we continue to be in a leadership position...and we continue to innovate in the marketplace. From our standpoint, we leave decisions about how they want to count these things up to them."

Any way you paint the picture, Apple has disputed the veracity of the Web numbers for years, claiming its technology is used more widely than Web researchers have given it credit for.

Despite the player numbers, Apple cites a search on HotBot that depicts Apple with a greater share. A search for ".mov" files finds about 224,000 sites, while a search for ".ram" files (for RealNetworks) pulls up about 90,000 sites, and ".asf" for Windows Media products about 63,000 sites.

Phil Schiller, senior vice president of worldwide product marketing for Apple, said the streaming media numbers are inherently flawed for a host of reasons. In one example, Nielsen counts proprietary formats but not MP3, the de facto standard for Internet audio.

In the past year alone, he said, QuickTime 5 was downloaded 100 million times, suggesting it has a much bigger share than has been typically reported by the major Web metrics companies.

"A whole bunch of content gets discounted," Schiller said. "At Apple we have been promoting that people use open standards more and more, but those standards often are the things not counted in these market records. The more you dig into anybody's counting the more you find limitations in what they count."

RealNetworks claims some 270 million registered unique users for its RealOne and RealPlayer products. Microsoft's Windows Media player comes bundled with its Windows operating system, which runs 90 percent of the world's PCs.

With a larger acknowledged footprint in the streaming media landscape, Apple could gain additional credibility and give greater weight to its calls for adoption of a video and audio standard.

With QuickTime 6, Apple has given its full support to the latest specifications endorsed by the Moving Pictures Engineering Group, dubbed MPEG-4.

MPEG-4, like its predecessor MPEG-2, is expected to foster the burgeoning industry of interactive video in a host of devices such as set-top boxes, DVD players and PCs. The video and audio compression format delivers the same video quality of that of MPEG-2, the standard for DVD players, but at half the bit rate. With the bandwidth savings, industry supporters expect it to deliver a wide range of plusses, including making possible interactivity and e-commerce. By supporting MPEG-4 with QuickTime, Apple is poised to get greater buy-in on the Web because of its influence with content authoring world already using its suite of video editing tools.

The MPEG-4 standard already seems to be gathering steam. RealNetworks has said that it will support MPEG-4, and other systems such as iVast also support it. But Microsoft has yet to announce that it will support it in its next-generation media system, Corona, due out in public beta in late summer.

One last hitch to the release of QuickTime 6 has been the absence of a licensing fee plan with MPEG-LA, the patent holders of the newest standard. But Apple seems confident that a reasonable agreement will happen before QuickTime's official release in late summer.

In the end, Schiller said, the numbers are fairly meaningless because consumers rarely consider which player they use. The MPEG-4 standard, he said, will be the key to opening a marketplace in which consumers have improved options.

"We're not proposing an open standard because we want to improve our position to the other players. We are creating a healthier marketplace for all of the players in this marketplace," he said. "We hope with an open marketplace, customers will have the choice of choosing our products."