RealNetworks Puts Weight Behind MP3 Music Format

In another demonstration of the growing strength of the movement to distribute music over the Internet, RealNetworks Inc. today will roll out a new version of its popular audio player that includes native support for MP3--a format that has music labels concerned about piracy of their products.

The support of MP3 by RealNetworks, the dominant supplier of so-called “streaming media” players, illustrates that technology companies, even as they work with the music labels to develop copyright protection schemes, will not wait for the recording industry to catch up.

“It’s not always possible for the stakeholders to have it always play out the way they want it to,” said Rob Glaser, chairman and chief executive of the Seattle-based software firm.

“We’re seeing more and more folks in the major labels understand the underlying opportunities here, and in the long term it’s going to be great for the traditional industries and the artists that are nimble and take advantage of this.”

RealNetworks’ new product does make concessions to the record industry’s piracy concerns. The player’s default set-up prohibits users from duplicating copyrighted materials, but those settings can be changed easily by the user.

Support for the MP3 format, which delivers near-CD quality audio in a compact digital format that can be transmitted over the Internet, has been building among music fans who want to share songs with friends and among musicians, particularly lesser-known artists, eager to reach a broader audience.

“This instantly catapults MP3 from the enthusiasts market to the mainstream market,” said Jae Kim, an electronic-commerce analyst with Paul Kagan Associates in Carmel. “It’s a harbinger of MP3 and the whole digital download of audio coming of age.”

RealNetworks’ move is likely to irk some record labels that might see it as a legitimation of a format they see as promoting piracy.

“Some of the record labels will probably not be terribly happy with this,” said Mark Mooradian, an analyst with Jupiter Communications. “That said, some probably realize that MP3 existing is inevitable and they just have to come to terms with it.”

The recording industry in December launched an initiative to develop a copyright-friendly standard for delivering music digitally, but most agree that the standard will not be finalized in time for this year’s holiday shopping season.

And while audio technology companies say they respect the record labels’ intentions, they also need to acknowledge the market demand for MP3.

“The labels understand that we didn’t create MP3 and we didn’t create an environment where, using this legitimate MP3 format, there is obviously pirating going on,” Glaser said. “But this is a totally legitimate and new phenomenon and it’s a great opportunity for individual rights holders and new artists and independent labels to get their music out.”

RealJukebox marries the ability to play almost any digital audio format, whether on a hard drive, compact disc or the Internet, with an extensive music management system that lets users record and copy music, compile playlists and send and receive audio files.

While software from other companies, including Microsoft Corp., IBM Corp. and AT&T; Corp. and several smaller players, offer somewhat similar functions, the RealNetworks offering is both more complete and more widely distributed.

RealNetworks also will announce today that RCA will license the RealJukebox software for a portable digital audio device called Lyra that it plans to launch in the third quarter of this year.