Response to Harmony...

After posting about the importance of choice brought forth through RealNetworks new Harmony technology, Aaron Raphel, a friend of mine from MIT sent me the following points which he wanted to put in the comments. I think he raises good points so I wanted to address them here. Each section below is his comment followed by my response:

Aaron
1) I agree that choice is good for consumers, but what's wrong with consumers *choosing* Apple's model of iPod/iTunes integration? You assume that someday, I will want to move my music from my iPod onto a different MP3 player, and I question that assumption. I don't feel locked in at all--I had full choice of MP3 players, music stores, streaming services, etc. and I chose Apple. Just because other companies have less attractive offerings doesn't mean that Apple is doing anything wrong.

My response:
There is NOTHING wrong with consumers *choosing* Apple's model of integration... but I wonder how many iPod owners know that if they want to choose another MP3 player later on they will have to go through a difficult process to get their songs onto those devices. My guess is that consumers don't know they are locked in. This is all about choice, and we want to make sure consumers make an EDUCATED choice... and if they choose Apple's integrated closed approach, great... if they choose Real's interoperable open approach great... but atleast they have a choice.


Aaron:
2) If the courts decide that Harmony violates a law, then customers who purchased music *thinking* they could play it anywhere will lose. I'm not saying that Real did anything wrong, but there are numerous scenarios where the Real songs I purchase today won't play on my iPod in three months. Harmony may be legal, but it's also legal for Apple to change their firmware to prevent Real music from playing. Ethical issues aside, consumers may still lose out.

My repsonse:
For songs purchased from the Real Music Store to not work on an iPod will require that Apple either 1) Sues RealNetworks or 2) Purposefully breaks our Harmony implementation. While I am not a lawyer, I have talked to lawyers who believe that our implemention is perfectly legal and in the spirit of interoperability. If Apple decides to do a firmware update we will work hard to implement a fix that ensures your songs get on your player. Either action by Apple will be without question anti-consumer. Think about it, if they do this they are trying to eliminate consumer's ability to choose, and I doubt they will do it. My best guess is that the likelyhood of a consumer switching MP3 players in the future to a player where their music bought through iTunes is no longer supported is much greater than the odds of either one of the above happening.


Aaron
3) Can someone please explain to me how the music that Real offers is different
from the music Apple offers? I could see the argument about consumer benefit
making sense if Real offered a completely different music library, but as far
as I can tell, they don't.

My Response:
For the most part each music service has the same library of songs... this is because the major labels aren't playing favorites and giving similar deals across services. While the content offered is similar, the Real Music Store has all of their music encoded at 192Kbs while the iTunes Music Store is encoded at only 128Kbs.. while you won't notice the difference on crappy headphones, you would hear a difference on a home stereo.

Aaron:
4) As a shareholder in Real, I wouldn't be so excited about a loss leading
strategy that's designed to grow market share. That seems like a risky
strategy, because I see no reason for consumers to stay loyal (see point 3
above). Yes, I can get my music cheaper, but if it stops working (point 2),
then I lose. Unlike Microsoft's dominance of the OS market, I think Apple's
large market share is because of a superior product and service, not any
strongarm tactics. If that's the case, then I can't see this music sale
helping Real.

My Response:
Any marketing promotion/campaign is designed to have a positive ROI... we believe that this promotion will in the long run have a high payoff. Hopefully we will gain more users of our music services while at the same time educating users around the advantages of choice and better quality music.