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Glaser turns wrath on Apple, Jobs

RealNetworks' chief says refusal to make iPod compatible with music services other than iTunes was "pigheadedness."

SAN FRANCISCO--Rob Glaser has made his peace with Microsoft's Bill Gates. Now, the RealNetworks chief executive is turning up the rhetoric against another technology icon: Apple Computer CEO Steve Jobs.

At the Digital Living Conference here on Monday, Glaser told a packed hotel ballroom that Jobs & Co.'s refusal to make the iPod compatible with music services other than Apple's iTunes was "pigheadedness." Glaser also said that Apple's unwillingness to cooperate with other online music vendors promotes piracy of copyrighted materials and will eventually draw the wrath of consumers.

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Video: RealNetworks' CEO Rob Glaser
"Apple's pigheadedness."

These are heady times for Glaser and his Internet multimedia company, which announced in October that it had reached a favorable settlement with Microsoft on the $1 billion lawsuit RealNetworks filed in 2003.

Under the deal, Microsoft agreed to pay $460 million in cash to settle the antitrust claims and will also pay $301 million to support RealNetworks' music and game efforts. In addition Microsoft will promote RealNetworks' Rhapsody subscription music service on its MSN Web business.

Perhaps Jobs unknowingly helped RealNetworks and Microsoft find common ground. In 2004, Glaser appealed to Jobs to make the popular iPod compatible with other music services. Microsoft has long sought to strike partnerships in the digital-music arena to help it challenge Apple's enormous lead in the sector.

Jobs responded by telling his shareholders that a deal with RealNetworks simply was "not worth it." Glaser didn't let that stop him. In July 2004, RealNetworks released a version of its music download service compatible with Apple's iPod--without the permission of Jobs & Co. Apple has called it "hacker tactics" but hasn't filed a lawsuit.

Following Glaser's presentation he was asked whether Apple's unwillingness to allow others access to the iPod, the hot-selling digital music player, was hurting RealNetworks.

"We think Apple Computer, and Steve personally, are making a mistake by making the software proprietary," Glaser said, noting that RealNetworks would continue catering to users of Macintosh computers. "There's no reason we should penalize Apple customers for Steve's pigheadeness."

In an interview following his presentation, Glaser called for the music industry to pressure Jobs into opening up the iPod to other online music vendors.

"Steve makes for a good pinata because he's taken a position against interoperability," Glaser said. These people "should be pressuring him to change because they have leverage over him. Apple being on its own in term of interoperability makes piracy more compelling for consumers. Because, hey, if I take all my MP3s from this illegal site or that illegal site, they'll work on the iPod or anything else. Whereas if I buy them legitimately, they'll only work at one place."

Glaser said that consumers could blame Apple if they can't hook up their music with their other digital content should such convergence become popular.

Glaser was at the conference to debut a revamped Rhapsody digital music service, which will let people search and listen to its catalog of songs from a Web page, instead of requiring them to download software. RealNetworks is hoping that an overhauled Rhapsody site will help it stand apart from competitors, which often require users to download software before they begin listening to music.

In an effort to draw attention to the site and compete with iTunes, RealNetworks is allowing visitors to stream 25 songs for free.

"I don't think anyone offers anything freer than 25 (songs)," Glaser told the audience following his speech. "We're the cost and price leader."

But can RealNetworks make money with such a strategy?

"We already know from having done six months of work that the economics of getting consumers to use free services are good," Glaser said.

Among the strategies available, RealNetworks can sell ads to the site or steer customers to premium services that company could charge for.

"Google had a ubiquitous strategy before a monetary strategy and last I heard it worked out for them," Glaser said.

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