In a news release issued yesterday announcing the launch of its Harmony Digital Rights Management system, RealNetworks asserts that, “Before Harmony, consumers buying digital music got locked into a specific kind of player” and that this new software is “key to bringing digital music to the masses.” The release ignores the fact that portability and interoperability have existed for years for consumers and services that leverage the industry-standard MP3 format—and that consumers have adopted the format in mass.

“Universal compatibility is critical to the growth of the digital music market,” said David Pakman, Managing Director, Dimensional Associates, Inc. the private equity firm that owns, Inc. “The MP3 format is already the established standard providing universal portability and compatibility. When consumers buy digital music, they want to be sure it will play everywhere. Music sold through eMusic plays on any and every digital music device.”

Scores of existing digital music services sell music in the MP3 format. The leading such service, eMusic, makes available a selection of more than 400,000 tracks as MP3s and has sold more than 21 million tracks since its inception, all of which are playable on every portable digital music player available on the market, including the iPod. Since the iPod’s introduction in 2001, the device has been capable of playing music files in the universally compatible MP3 format.

Music sold through some digital music services, including RealNetworks’, are wrapped with proprietary Digital Rights Management (DRM) software. When purchasing digital music wrapped with DRM, some potential issues arise that are contrary to consumers’ expectations.

* Consumers want their music to forever be compatible with any software

* Consumers want their music to play on current and future digital music
devices from multiple manufacturers.

* Consumers do not want to be confused by complex and varied usage rules
that surround DRM-based tracks (such as restrictions on the number of
CD burns allowed, etc.)

* Consumers want their music collections to be managed across multiple
devices, such as computers, portable players, and digital car stereos.

To date, only one format meets all of these consumer requirements: the MP3 format.