Real Responds; Pot Persists In Calling Kettle Black

What a riot.  First, Real implements a proprietary DRM scheme, and then tells Apple that they should license FairPlay.  Now, having sued the makers of software that interoperates with Real’s software, Real tells Apple that the DMCA allows creation of interoperable software and Apple has no grounds to sue over Harmony.

Here’s Real’s press release: (emphasis added)

“RealNetworks, Inc. is delighted by initial consumer and music industry support for Harmony. Compatibility, choice and quality are critically important to consumers and Harmony provides all of these to users of the iPod and over 70 other music devices including those from Creative, Rio, iRiver, and others. RealPlayer Music Store provides the highest sound quality of any download music service. That’s why so many consumers have welcomed news of Harmony. Consumers, and not Apple, should be the ones choosing what music goes on their iPod.

Harmony follows in a well-established tradition of fully legal, independently developed paths to achieve compatibility. There is ample and clear precedent for this activity, for instance the first IBM compatible PCs from Compaq. Harmony creates a way to lock content from Real’s music store in a way that is compatible with the iPod, Windows Media DRM devices, and Helix DRM devices. Harmony technology does not remove or disable any digital rights management system. Apple has suggested that new laws such as the DMCA are relevant to this dispute. In fact, the DMCA is not designed to prevent the creation of new methods of locking content and explicitly allows the creation of interoperable software.

We remain fully committed to Harmony and to giving millions of consumers who own portable music devices, including the Apple iPod, choice and compatibility.”

See also this article in Forbes.  I see the distinction Real’s trying to make; Streambox actually removed the DRM such that you could record the stream.  But the distinction is irrelevant in the eyes of the DMCA.  You’re either circumventing or you’re not. It doesn’t matter that you circumvent and then put the file in another DRM format.  update: See above and the comments section for this post for what I mean by this.

Apple Threatens Real

Apple has released a statement in response to Harmony:

“We are stunned that RealNetworks has adopted the tactics and ethics of a hacker to break into the iPod(R), and we are investigating the implications of their actions under the DMCA and other laws. We strongly caution Real and their customers that when we update our iPod software from time to time it is highly likely that Real’s Harmony technology will cease to work with current and future iPods.”

Along with piracy rhetoric, we now get evil hacker rhetoric.  Since when is reverse engineering unethical?  Oh right – since the DMCA, which Apple is predictably waving around.  Let me remind you that Real was one of the first companies to sue the creator of an interoperating product under the DMCA, so it’s not as if they’re the innocent defenders of innovation here.  This could make for a fine DMCA battle royale, with copyright holders caught in between.  Or it could fade away – we’ll see.  (For more on the legal, business, and social welfare perspective on these issues, see also an earlier Harmony specific post, earlier posts on the iPod-iTunes tie and the Berkman Center’s iTunes Music Store Case Study.)

I certainly believe Apple’s threat to alter FairPlay/iPod/et. al. so that Harmony-made songs can’t play.  We’re bound to see some back-and-forth on the tech side.  There was some discussion yesterday about the mechanics of the DRM and whether altering iTMS songs would affect Harmony-made songs.  Hymn co-creator Jon Johansen chimed in saying that Harmony “generates a new user key which is added to the key store on the iPod.”  On his blog, he cited a posting by a supposed Real codec engineer.  If this is the case, can Apple simply update the iPod software to cut out Harmony?

Also, see‘s coverage of Apple’s statement.  Forrester Research also has an analysis up with some predictions of what’s to come.  Forrester predicts that Microsoft will try to create something similar to Harmony, but I doubt it.  They’ve been doing just fine licensing WMA out to everyone; they don’t need to get WMA songs onto the iPod.  Only if Microsoft’s DRM/media side ended up in the desperate state that Real’s in would they make such a move.  However, I do agree that this is going to be a tricky situation for Apple to deal with. Short run, the iPod is probably running too strong for this to matter. But, long term, as cheaper, alternative players come out, Apple will probably have to make some adjustments.  Finally, Forrester notes that Real created Harmony with the record label’s consent and thus the question of copyright holders suing Real under the DMCA is probably moot, as I had assumed.

BusinessWeek has an editorial (via with some useful nuggets surrounded by some plainly silly arguments (the author argues that an open standards approach to digital music never worked and Apple saved the industry, when the music industry never even tried such an approach).  From a business perspective, the author may be right that it’s in Apple’s best interests to end Harmony.  In any case, PaidContent is right that the hidden gem in this article is this quote from Napster’s Chris Gorog: “We’re going to look at [licensing Harmony from Real] very carefully,” he says. “If Apple doesn’t fight it, and the technology works, we’d be seriously interested. But Apple will most likely fight it.”

Remember, though, Harmony does not convert WMA (which Napster uses) to FairPlay-AAC.  It only moves from Helix-AAC to WMA and FairPlay.  Gorog would need to talk to Microsoft about a WMA to FairPlay converter, I’d assume.  I don’t think he has the power to create a Harmony-like converter for Napster.

More coverage of the business questions for Apple from CNN Money (via