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Emedia Professional, July, 1999 by Jan Ozer

the great thing about being the established market leader of an Internet technology is that you get all the good press and your stock price goes through the roof. The bad thing is that everyone always guns for you when announcing new products, and there's nowhere to go but down since no company can hold 85 percent share forever.

If you're RealNetworks--and the folks gunning for you are Apple and Microsoft--their product announcements make your stock peak and plummet like a roller coaster. Must be awfully distracting, but it's a nice problem to have, nonetheless.

what's past is prologue

Since it invented streaming audio in 1994, RealNetworks has dominated the market with its pre-eminent vision, great products, and flawless marketing. Microsoft plowed through its normal three lackluster revisions with uncharacteristic marketing flaws, like originating the NetShow brand and then merging NetShow into NT Server and tubing the brand.

At the same time, Apple added Internet-friendly features to its QuickTime development architecture, slapped a 3.0 label on it, and called it a streaming media product. Despite a grand heritage, QuickTime 3.0 wailed Microsoft and Real in virtually any category you could imagine--from audio/video format quality and an embarrassingly homely player,' to missing features like a server, live broadcast, and multicast capabilities.

So after slaying startups like VDO, Vivo, VXtreme, Iterated Systems, and Xing--in the marketplace or through purchase--Real, it appeared, had slayed the giants as well.

the MP3 factor

Meanwhile, the record industry experienced its own tempest in a teapot over the increasing use of the MP3 format by high school and college students to transfer music files, both legally and illegally.

Noticing that commercial CD sales to this age group was diminishing, the record industry tried to huff and puff and blow MP3 away, through lawsuits and press releases well-chronicled in this magazine. Bowing to the inevitable, however, executives now seem resigned to distributing music over the Internet. Before they do, however, they'll need a secure music delivery system to prevent unlawful copying.

To date, from the surfer's perspective, streaming media has been largely free. When we start buying music over the Internet, however, streaming media becomes a revenue opportunity. If your secure music delivery platform wins, you'll get a chunk of revenue from each purchased song. Plus, with players looking more like NASCAR racers with ads plugged into every nook and cranny, the merchandising opportunities become significant. All of a sudden, you can make money from this streaming media business. Hmmm. Awaken the sleeping giant.

the sleeping giant

On April 28, Microsoft formed a streaming media division to focus on the "next generation of business and entertainment applications." At the same time, Microsoft introduced Windows Media Technology 4.0 Beta (WMT 4.0), which--according to my tests--offers audio quality superior to Real's. Microsoft also claimed that audio quality was better than MP3 at half the data rate--an assertion my tests didn't prove.

But most significantly, WMT 4.0 includes a digital rights management package, allowing record companies and other digital content publishers to sell online securely. Not to be outdone, RealNetworks introduced its RealJukeBox product, which, among other features, serves as the client for the secure digital music initiative the company announced with IBM.

So we're seeing the two leaders in streaming media divert their main focus away from streaming media. Enter Apple's QuickTime 4.0 (QT 4.0), a compelling streaming media product that will appeal to many Web developers.

Briefly, QT 4.0 includes a server component, which provides the necessary network protection for intranets, as well as true streaming performance. Also included are upgraded audio/video codecs from QDesign and Sorenson, and real-time encoding for event broadcasting. Apple's redesigned player should match up well against Real's G-2 player, and outclasses Windows Media Player by a mile.

It takes months to assess a streaming media architecture, and we haven't even begun measuring QT's quality or performance, though initial reports are positive. The iMac's startling sales show incredible pent-up demand for any Apple product with style, so we can expect QT to get evaluated closely by any creatively oriented Web site.

Of course, whether QT 4.0 dislodges Real or even creates serious waves remains to be seen. Real's brand may be so well-established that it can withstand superior technologies. Besides, I'm sure Real isn't sitting still on the development side. The RealJukeBox has even the most reticent reviewers gushing.

However, QT 4.0 is a true streaming product introduced when Real and Microsoft are focused elsewhere, however temporarily. And while the secure music delivery issue is incredibly important to record companies and generation X-ers, most site developers and surfers care primarily about streaming media quality and feature set. So it comes at a very good time.