Turn About Is Fair Player

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Lisa Rein

Lisa Rein
Jul. 10, 2001 12:35 AM
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A few weeks ago, Microsoft and AOL Time Warner decided to call it quits after several months of negotiations surrounding, in a nutshell, whether or not the AOL icon would ever see the light of day on a Windows XP desktop.

This dispute amounts to the latest battle of the ongoing war between the two corporate giants over not only the new frontier that is the digital music delivery marketplace, but also the "old school" developer territory of the web development marketplace.

AOL claims that negotiations were dropped as a direct result of its refusal to stop bundling RealNetworks' RealPlayer in the latest version of its AOL client (6.0) because a RealPlayer-enabled AOL client that shipped with its new Windows XP operating system would compete directly with its own "Windows Media Player" (titled either version 8.0 or XP, depending on the context of the marketing documentation). Microsoft denies such allegations, and insists that it isn't threatened by the potential competition the player presents; It just doesn't want to be responsible for supporting RealPlayer or any other software that AOL might arbitrarily decide to include in future releases.

However, it appears that what Microsoft perceives as the "real" danger isn't only the RealPlayer on its own, but also the collective threat that AOL's software package poses if it should be perceived as a viable development platform alternative to Windows XP.

In a recent Industry Standard article by Dominic Gates, Microsoft spokesperson Jim Cullinan explained how AOL's metamorphosis from client to development platform constitutes a competitive threat to Microsoft's current dominant position in the PC software marketplace:

"AOL is positioning itself as a platform not only for end-users, but potentially for developers to build on top of, for many devices, from PCs to TVs to game consoles," said Microsoft spokesperson Jim Cullinan.

That's exactly the threat to Windows that Redmond perceived from Netscape in the mid-1990s: that developers would build apps on top of the browser and make the OS a commodity. Microsoft's response then was to bundle its own browser with the OS for free. That's what got antitrust litigation moving in the first place.

Cullinan conceded that AOL hardly has a Windows-style position yet on TV sets, in phone services or on game consoles. But Microsoft, never short on paranoia, sees awful potential. "It may not be fully developed yet, but the seeds are there," he said.

"AOL Time Warner is a huge company," Cullinan added. "They have the bandwidth and the resources to create the platform competition."

Of course, Microsoft's real platform competition is not only with "huge" AOL Time Warner. It's also, and arguably even more so, with AOL's upstart partner RealNetworks. This time around, Microsoft's Windows Media Player, rather than its IE browser, is being bundled with its latest OS in an attempt to thwart the positioning of both its large and small competitors.

Although Microsoft claims that it isn't trying to dictate which player is used by AOL's 30 million users, or attempting to exercise control over AOL's partnering and bundling decisions, or attempting to make AOL's abandonment of RealPlayer a requirement of AOL's icon being included on the default desktop configuration of Windows XP, the company's track record suggests otherwise.

Historically, Microsoft has consistently been able to exercise control over its partners' partnerships, based on its Windows operating system's unprecedented ability to deliver a software product directly to its huge installed user base. As a direct result of the success of its past alliances with Microsoft, AOL now has its own firmly entrenched end user base of over 30 million users that can combine with partner RealNetworks' 200 million users to provide a new found bargaining power.

All this makes the AOL client's inclusion in future versions of Windows much less of a necessity. Especially considering that AOL has already secured its ability to appear in Windows XP's start menu via several agreements with numerous hardware manufacturers.

Many important developments have transpired since AOL and Microsoft originally partnered in 1996, causing the ties between AOL (now AOL Time Warner) and RealNetworks to go far beyond AOL's using RealNetworks as its default media player. Not only are the two companies partners, along with Bertelsmann and EMI, in MusicNet, an online music subscription service currently in the planning stages that is slated to provide Napster, among other, with music from the major labels, but the company now owns historical arch rival Netscape, and is therefore indirectly keeping the Mozilla open source browser project alive.

As a recent article by BusinessWeek Online Associate Editor Amey Stone explains, RealNetworks' recent slew of partnerships in the digital entertainment delivery space is quickly threatening Microsoft's already less-than-dominant position. The article cites a number of deals the company has made with the major industry players within several of the technology spaces deemed to be the most lucrative in the future, including:

  • Sony, which will be incorporating Real's software into its PlayStation II system (which will compete directly with Microsoft's Xbox video game console).

  • Hewlett-Packard, which will be building Real's software into its new digital-entertainment devices (which will compete directly with Microsoft's set-top boxes and tv-based services).

  • Nokia, which will be adding streaming software to its mobile-phone handsets.

  • Cisco, which will be building Real-based streaming capabilities into its Internet routers.

Not coincidentally, RealNetworks has recently announced its own secure digital media delivery system, the RealSystem Media Commerce Suite, that works with the latest version of its RealPlayer that shipped last March.

File types other than the Windows Media Format cannot be processed by the Windows Rights Manager, the Windows Media Player or any of the other tools provided in the Windows Media 7.1 SDK. (As explained in Microsoft's own documentation, which I link to in the Resources section below.)

Additionally, RealNetworks claims it is promoting an open, standards-based approach to Digital Rights Management that will enable different e-commerce systems to work with multiple DRM technologies and media formats on multiple hardware platforms. Unlike Microsoft's DRM solutions, which are platform, operating system and format-specific, the RealNetworks system's servers can run on HP-UX, IBM AIX, Linux, Solaris and Windows NT/2000, and also support numerous media formats, including: MP3, Apple QuickTime, Flash and many others. (Although the RealPlayer client itself is only available on Windows and Macintosh platforms, RealNetworks' server-side systems are designed to stream and deliver content to other brands of players on non-PC/Mac platforms.)

All of these recent developments seem to neutralize the possibility of Microsoft cornering the digital music delivery market or having any sort of ability to force consumers into buying the new PC hardware and software that its media format and player require. Unless all of RealNetworks' announcements never actually materialize into products, of course. Which is always a possibility...

Does all this mean that fair competition within the marketplace has actually prevailed? Only time will tell.

The "good news" for Microsoft is that it looks like this time around it won't be given just enough rope to hang itself or allowed to commit the same kinds of anti-trust violations that, despite its recent victory in the courts, ultimately took up far too much of its valuable time and resources. The "bad news" for Microsoft is what might become of its Windows Media Player's market share should it fail to realize the potentially damaging consequences of its current self-defeating strategy.

Hopefully Microsoft will realize the situation in time to change its mind and provide support for a wide variety of media formats and DRM systems before Windows XP is released October 25th. Otherwise, it may be difficult for even the most dedicated of its OS user base to choose a restrictive Windows Media Player over the cross-platform and media-friendly options provided by its competition.

Resources

Microsoft's Digital Rights Management Documentation

Lisa Rein is a co-founder of Creative Commons, a video blogger at On Lisa Rein's Radar, and a singer-songwriter-musican at lisarein.com.