Apple to Real: Get Lost

Yesterday I blogged about RealNetworks overture to Apple to open up the iPod. Today it appears that Apple has told Real that they aren't interested. Apparently Jobs wouldn't even meet with Glaser... here is a quote from the Real spokesperson:

"He's in the neighborhood, but whatever meeting Rob wanted with Steve isn't happening," RealNetworks spokesman Greg Chiemingo said Thursday. "Steve just doesn't want to open the iPod, and we don't understand that."

I think that Apple is making an incredible mistake by not opening up the iPod. Locking in users to the Apple music platform (you can only buy music for the iPod from iTunes, and songs purchased from iTunes only works on iPods and no other portable music devices) is not a winning strategy. In a WSJ report earlier this week Jobs was quoted as saying: "'The iPod already works with the No. 1 music service in the world, and the iTunes Music Store works with the No. 1 digital-music player in the world,' he said. 'The No. 2s are so far behind already. Why would we want to work with No. 2?'"

Well, since Steve asked, let me answer. You work with No. 2 for the following reasons:
1) When RealNetworks asks you to "open up" the iPod, all they really want to do is to sell music for the device. Jobs has stated that they don't plan on really making money on the iTunes store, they just want iTunes to drive sales of the iPod, where they really make their money. Having another service, like Real's music service selling songs that will play on the iPod will only HELP sales of the iPod and slow the adoption of other devices.

2) There is a small firm up in Redmond that is planning to take over the digital music industry. Bill and the boys are backing the WMA music format and is licensing it widely to all the major music stores, but the WMA format won't play on an iPod. So, Steve, you join with a No. 2 to make your format an even stronger No. 1! Having more music services selling the AAC format with your DRM technology will enhance your ability to fight off Microsoft, and Apple will need that help.

3) I believe the digital music business is just he first digital media service war, with the next being digital video services. By partnering with other companies, and proliferating their DRM technology, Apple will have some momentum in the DRM market and hopefully get a chance to play in the digital video space.

Here is a link to the full AP story: AP Wire | 04/16/2004 | Apple Rebuffs Online Music Alliance