Microsoft and RealNetworks have settled their long-standing legal differences in a high-profile agreement that promises to boost Microsoft’s MSN audio capabilities while giving RealNetworks a lift through Microsoft’s market-leading Xbox player and MSN portal. The companies announced today the resolution of their antitrust fights through three agreements they value at $761 million.
The deal includes an agreement to resolve all the companies’ antitrust disputes worldwide; an agreement for a wide-ranging digital music collaboration between Microsoft and Real, including promotional and marketing support of Real’s digital music subscription service, Rhapsody, on MSN properties; and an agreement to offer RealNetworks’ digital games through MSN Games and Xbox Live Arcade for Xbox 36. Under the music and games deal, Microsoft will pay Real $301 million in cash and provide services over the next 18 months to support the development, distribution and promotion of Real’s products.
Microsoft can offset some of the payment through credits it can obtain through the delivery of additional subscribers to Real through MSN. Real will also support MSN Search and both companies will promote use of Windows Media technologies with Rhapsody to Go.
But Real walks away from the pact with $460 million in cash payments that will resolve all damages claims stemming from the company’s 2003 antitrust lawsuit against Microsoft, in which Real accused the Redmond, WA-based software giant of monopolizing how PC makers incorporate media player technologies into PCs.
Hailing the deal as a new chapter in the relationship between the two companies, Bill Gates and Real’s Founder and CEO Rob Glaser took the stage at a live press conference that was also webcast (which was available almost immediately on an archived basis at Real’s website, but not on Microsoft’s corporate website.)
Glaser, who left Microsoft to found Real, said the agreements go beyond a mere settlement of the legal fight. Gates agreed and said “there’s some innovation [too]…we see this as just a beginning.
“Our view is that digital entertainment is just at the beginning..there’s a lot still to be done,” he added. Glaser agreed that the timing is right giving the still early development of digital entertainment. “Digitalization of media is one of these massive twenty year trends and I think we’re 10 years into it,” he said.
Picking up on the two hottest Internet trends, search and community, Microsoft will incorporate full-length songs provided by Real’s Rhapsody music service into MSN search, and will port music capabilities into MSN Messenger so that IM’ers can swap and share music instantly. MSN will also feature a special Rhapsody music section.
The dialog between the two foes began about a year ago when they joined hands on the joint DRM technology known as Harmony, and was surely aided by Microsoft’s difficulties in working out a deal with the record companies in its efforts to jumpstart a subscription music service.
Cynthia Brumfield at 1:57 PM|Comments(0)
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