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Real buoyed by streaming audio wave

The company's plan to team with IBM to create a standard for online music delivery sends the streaming firm's stock through the roof.

RealNetworks' plan to team with IBM to create a standard for online music delivery sent the streaming firm's stock through the roof today, up more than 19 percent.

RealNetworks' stock closed higher 39.5 points, or 19.04 percent, at 247. That comes after last week's 26 percent jump, which analysts attributed to the increased interest in Webcasters following Yahoo's acquisition of Broadcast.com as well as greater focus by content and advertising companies on incorporating audio and video content in Web offerings.

Under the deal with IBM, RealNetworks will develop consumer software based on IBM's Electronic Music Management System, one of several music delivery formats competing for both adoption by the record industry and status as a standard among consumers.

IBM's system will be used by the "Big Five" labels--BMG, EMI, Sony Music, Universal Music, and Warner Music--in a market trial of an offering that IBM says allows for easy, fast, secure distribution of music online. The trial is slated to take place in San Diego this spring.

Other streaming firms also rode the stock wave today. InterVu, which provides back-end service for sites that want to stream audio and video, jumped 23.48 percent, or 13.5 points, to close at 71. Visual Data Corporation, which creates libraries of multimedia content for access online, rose 14.29 percent, or 3.9375 points, to 31.5.

For RealNetworks, the IBM deal is a move forward into the world of digital downloads, said Maria Cantwell, senior vice president of Real's consumer and e-commerce division.

"IBM has the back end, and we'll supply the client," she said. "With our expertise in client software, it makes sense that we would look for partners" that are pursuing online delivery of music and other content.

Mark Mooradian, an analyst with research firm Jupiter Communications, noted that the deal is "a good thing for Real."

"What Real has vested in this is that they're trying to hang on to and dominate the leadership position it has with the RealPlayer," he added.

Still, Real and IBM face stiff competition, with the likes of a2b Music, Liquid Audio, and Microsoft, among others, all focusing efforts on a music delivery standard. Microsoft is expected to showcase its new product, MS Audio 4.0, at an industry event in Los Angeles tomorrow night. At the moment, MP3 is considered by some to be a de facto standard for music downloads, but it is not acceptable to the major record labels because its insecurity allows for the easy distribution of unauthorized copies of songs online.