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The Digital Millennium Copyright Act of 1998 outlaws
hacking into anti-piracy measures, but it allows engineers to test for
“interoperability” between systems.
And this is where RealNetworks found its opening. In a counter-statement,
the company said, "Harmony follows in a well-established tradition
of fully legal, independently developed paths to achieve compatibility."
More is at stake than a piece of the $270-million online music market--
eventhough it is expected to top $1 billion by 2010. Analysts say the
very model on which Apple built its successful iTunes-iPod product combo
is at risk.
The model is at the center of an ongoing debate in technology circles:
proving ownership—and making money—and interoperability.
With lackluster sales of late, Apple’s sweetest plum has been
its iPod. And the iPod’s success of the iPod is tied to iTunes,
because Apple embeds every song it sells with FairPlay DRM (digital
rights management). FairPlay ensures that both artists and Apple get
paid for each download, but the songs thereafter are unplayable on devices
other than the iPod.
By pricing songs individually and offering them for immediate download,
iTunes revolutionized how consumers bought music. RealNetworks, who
is not in the hardware business, is betting that customers are happier
not being tethered to the iPod.
Apple can’t help but see the threat Harmony poses to both its
market share and business model, and withhold the olive branch.
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