RealNetworks in Digital Rights Push

RealNetworks Inc. plans two new efforts to boost the legitimate distribution of music and movies online, widening its battle with Microsoft Corp. over the nascent online media market.

The initiatives, expected to be announced today, focus on how record labels and studios protect and control their property as it’s distributed through the Internet. This “digital rights-management” technology is critical not only to deterring piracy, but also to creating music and video services online.

Major record companies have made only a small percentage of their songs available online, and consumers have shown little interest in paying for songs wrapped in cumbersome electronic locks. Nevertheless, analyst Matt Bailey of media research firm Webnoize predicted all legitimate online music services will use rights-management technology, and that nearly 12 million consumers would sign up for them within three years.

Seattle-based Real has developed its own version of rights-management software, which it plans to use in the MusicNet song distribution service it announced last month with BMG, Warner Music Group and EMI. It also is organizing a drive to help record labels and studios work easily with multiple rights-management companies, online retailers and other providers of electronic-commerce technology.

That drive, which is backed by several technology, music and film companies, will eventually produce a standard method for connecting rights-management technology to online distribution systems.

The effort “is definitely a poke in the eye at Microsoft,” said analyst Mark Mooradian of research firm Jupiter Media Metrix. Microsoft has been integrating its rights-management technology into its products, including computer operating systems.

Real is several years behind competing suppliers of rights-management technology, including Microsoft, IBM, InterTrust Technologies and Liquid Audio Inc. But the market for protected content online is still in its infancy, Mooradian said, and no company has made much of an impact.

Real Chief Executive Rob Glaser, who left Microsoft in 1993 to found Real, said media and technology companies have taken a backward approach to rights management, concentrating on powerful electronic locks instead of compelling offers for consumers. Real’s focus is enabling labels and studios to set rules for how their products could be used, he said, rather than on defending the products against unauthorized copying.

Real’s system involves electronic locks, too, which Glaser said were certain to be broken at some point. But the company designed its software for distributing and playing music and movies to adapt to breaches in security, helping to limit the potential damage, he said.