Microsoft turns tables on RealNetworks

As the popularity of Microsoft's Windows Media format pushes it into the number one spot, Microsoft's only real rival in the digital media wars has finally decided to give in and license the technology. It's a major coup for Microsoft, which has been trying to make Windows Media the industry standard. And for perennial market leader RealNetworks, it was simply a matter of survival: Microsoft's media format had already been adopted by over 70 different companies, many of which are competing directly with RealNetworks to become a media destination on the Web.

"We want to work with anybody who has audio technology that we can integrate in a seamless way to provide a great consumer product," says RealNetwork's Rob Grady.

"Windows Media is poised to become an audio standard," Microsoft's digital media product manager Will Poole told reporters in a conference call Monday.

A year ago, RealNetworks controlled about 85% of the media streaming market, but Microsoft reports that its Windows Media Player surpassed all comers by December 1999. And the adoption of Microsoft's media format has grown dramatically recently, making it the top media format on the Internet.

Microsoft offers a free license for the Windows Media format, so that any media player makers can integrate the technology into their own products easily. Players from AOL/Nullsoft, Sonic Foundry, and a number of other companies have already licensed the technology. Microsoft also provides built-in digital rights management so that content providers can protect their work from illegal distribution on the Internet; this has garnered the support of the music industry's biggest players. And Microsoft's media format is smaller than competing file formats, allowing for faster downloads, while offering superior sound quality.

Analysts say that RealNetworks' decision to adopt Microsoft's media formats doesn't come as a huge surprise: The company was already working toward remaking itself as a Web destination for music and video. But for Microsoft, the results are all too familiar as yet another industry caves to the unstoppable flood of technology from Redmond

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