According to documentation leaked to "The New York Times," RealNetworks Chairman and CEO Rob Glaser recently sent an email ultimatum to Apple Computer CEO Steve Jobs: Join a "tactical alliance" with RealNetworks, or we're moving to Microsoft technology. The email message, which Glaser allegedly sent April 9, portrays a seemingly desperate man who apparently realizes that upcoming Microsoft audio technology will help Windows-based music services plow aside competition from Apple and other companies that don't offer subscription-based services. The Apple iTunes Music Store, although extremely popular, is currently a financial wash for the company because record-company executives demand a high percentage of each sale, and Apple has to foot the store's architectural costs.
"We are seeing very interesting opportunities to switch to \[Microsoft's Windows Media Audio (WMA) format\]," Glaser's email stated. "Instinctively, I don't want to do it because I think it leads to all kinds of complexities in terms of giving Microsoft too much long-term market momentum." What are these opportunities, you might ask? As I wrote in a Connected Home Media article this week, Microsoft will soon offer its music partners new WMA-based technology that will let consumers fill portable audio players with music acquired through a subscription (rather than purchased music). So, for a $10 to $20 monthly fee, consumers will be able to subscribe to services from Napster, Virgin Music, and other companies and download 5GB to 60GB of music each month to portable devices. Filling an Apple iPod or other device with purchased music would cost several thousand dollars more per year.
People who know Jobs say that Apple probably won't reverse its proprietary strategy and join RealNetworks in an "us-against-the-world" standoff against the WMA-compliant online music world. For his part, Glaser says he's surprised that the email message leaked. He describes the message as "reaching out" to Jobs before Glaser switches camps to WMA. "Why is Steve afraid of opening up the iPod?" Glaser asked. "Steve is showing a high level of fear that I don't understand."
Expect Glaser's email message to fall on deaf ears. Aside from Jobs's hubris and inability to see the big picture, Glaser isn't helping his cause by repeatedly berating Apple for not opening up its iTunes Music Store, iPod, and Protected Advanced Audio Coding (AAC) format. When Glaser was in England recently to push his company's new RealPlayer 10 software, he again chastised Apple for following the same unworkable strategy with digital music that the company pursued with the Macintosh, which has fallen to record low usage and market-share numbers under Jobs.