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Brier Dudley's Blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

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August 28, 2012 2:19 PM

RealNetworks cutting up to 160 jobs in overhaul

Posted by Brier Dudley

Another big layoff is happening at RealNetworks as the struggling digital media company tries to reorganize and regain its foothold.

Up to 160 jobs are being cut, reducing Real's employment by up to 14 percent. Up to 70 of the job cuts will happen at Real's Seattle headquarters.

Founder Rob Glaser, who returned to the chief executive position on July 3, informed employees today that that cuts are part of a new strategy and plan "to stop burning cash and to return the company to profitability."

"Unfortunately, a major part of this streamlining entails reducing our workforce from approximately 1,140 people to about 980 people," he wrote in a memo to employees today.

Thumbnail image for Thumbnail image for Rob_G_casual050808.JPG

Glaser (left) said the company is 80 percent of the way to having a plan to revive itself, but there are painful steps to be taken along the way.

"When I came back into Real after having been away from day-to-day operations for 2 1/2 years, I thought there was a pretty high likelihood that there would be a day like today," he told employees. "I knew it would suck for everyone, and indeed it does."

Real is cutting 80 jobs today. About 80 more employees were told their jobs will be cut over the next seven months, unless other positions aren't found for them within the company, although Glaser's memo suggests the plan is to reduce headcount.

If all 160 are cut that would be about 14 percent of the company's employees. That includes 40 immediate layoffs in Seattle and 30 that may happen later. Other layoffs are happening at Real offices around the world.

"The cuts were across the board. All organizations within Real were impacted," spokeswoman Barbara Krause said via email.

The company expects it will see $2 million to $2.5 million in charges related to the restructuring.

Real still is adjusting to the loss of its former stature as a leading digital media company. In recent years it shed assets and made commercial media services -- provided to customers like phone companies -- its major focus.

The ongoing reorganizations led to a series of significant layoffs over the past few years. More recently, the company has gone through a series of chief executives, culminating with Glaser's return in July.

Real's latest downsizing was telegraphed in an Aug. 8 earnings call when the company disclosed a plan to reduce costs by $45 million.

Here's Glaser's full memo, which the company released:

Dear RealNetworks Team,

I'm writing to provide an update on the progress we've made over the past 8 weeks and to provide some context and information regarding the layoffs that are taking place today.

When I came back in as Interim CEO on July 3rd, I said we would focus on 3 things:
Reviewing and assessing all of our businesses and new initiatives,
Coming up with a go-forward Strategy for RealNetworks that would set us up to grow and thrive, and
Putting together a plan to stop burning cash and to return the company to profitability.

I also said we would move fast, have a bias towards action, and would work hard to complete all 3 of these efforts within 2 months.

After a lot of hard work by many people across the company and around the world, today I report to you that we have indeed achieved the 3 objectives we set out to work on beginning 8 weeks ago.

Very soon I will have a lot more to say about our collective assessment of our businesses & new initiatives, and about our go forward strategy. Specifically, we have scheduled a series of company meetings - both in Seattle and at our main offices around the world - for on or around September 6th. After these meetings I believe that each of you in attendance will walk away with a clear understanding of our strategies and excitement regarding where we're going.

Today I will discuss our plans to return the company to profitability -- in a way that will set us up for future growth & success.

As we mentioned on our financial results call on August 8th, our senior team has put together a plan to cut at least $45 Million of annualized costs. This plan has several aspects to it; one of the main ones is to streamline our operations and to do things more efficiently.

Unfortunately, a major part of this streamlining entails reducing our workforce from approximately 1140 people to about 980 people. We are doing this in two phases. The first phase, which begins today, involves laying off approximately 80 people, who are being given notice today.

The second phase, which will take place over the next 3 to 7 months, involves approximately 80 more people, who are being notified today that there is a specific future date when their current assignment will be ending. We hope to redeploy a number of these people when their current assignments end, but as of today don't know how many we will find positions for. These people are working on projects that will merge duplicate systems or otherwise make us more efficient.

I want to express my deepest gratitude to the approximately 160 people affected by today's announcement, and also my remorse that we have had to take these steps. You have all made major contributions to RealNetworks. We are grateful for everything you have done for our company and our customers.

I also want to express my appreciation to the approximately 980 people who are not directly impacted by today's actions, and to acknowledge that many of you are indirectly affected, because of the impact on your colleagues and friends.

Permit me to close on a personal note. When I came back into Real after having been away from day-to-day operations for 2 ½ years, I thought there was a pretty high likelihood that there would be a day like today. I knew it would suck for everyone, and indeed it does.

But I promised myself that if we did have to do a significant layoff, I would do everything in my power to make sure that when we did it we also knew where we were going. I wanted to be able to look everyone in the eye and tell them that we have a plan to succeed that I believed in from the bottom of my heart.

I feel like we are almost there. While we still have a few areas to work out, we have made great progress. I can honestly tell you today that we are at least 80% of the way to having such a plan for every major part of our company, and have line-of-sight on the final 20%.

This clarity on strategy, as you would expect, has significantly influenced how and where we are cutting costs, and where we are investing for the future. I look forward to discussing this further when we meet next week.


Comments | Category: Digital media , RealNetworks , Rob Glaser , Seattle , Tech work |Permalink | Digg Digg | Newsvine Newsvine

May 24, 2012 11:04 AM

RealNetworks sued by state, consumers getting $2 mil back

Posted by Brier Dudley

In response to hundreds of consumer complaints over odd credit card charges by RealNetworks, Attorney General Rob McKenna investigated the Seattle digital media company and reached a settlement announced today.

The settlement will end "questionable practices" such as pre-checked boxes that Real used to obtain consent to bill customers. The practices included "free-to-pay conversions" that converted free trials to paying subscriptions, and obstacles to customers who tried to stop charges and cancel subscriptions.

"Deceptive pre-checked boxes and fine print obligated consumers to not-so-free trials for subscription services they didn't want in the first place," McKenna said in a news release. "People were charged for months -- sometimes years -- paying hundreds of dollars for subscriptions they knew nothing about."

Real used to have a reputation for obnoxious billing practices or "nagware" that turned some users into unwilling paying customers. Those practices may have contributed to Real's losing its early lead in online digital media, although the company also suffered from Microsoft's anticompetitive practices in the 1990s.

The state AG's office and Better Business Bureau received more than 500 complaints about Real's billing, and McKenna contacted the company starting in July 2010 to address the situation.

That led to a lawsuit and settlement filed today.

Real Chief Executive Thomas Nielsen said the practices "at the heart of the issue were discontinued years ago, prior to the commencement of this matter."

"While we disagree with the complaint filed by the Washington Attorney General, we acknowledge that some aspects of RealNetworks' e-commerce practices were not what our customers expected of us," he said in a prepared statement. "More importantly, those practices were not up to the high standards we expect of ourselves."

The timing is interesting, given that the questionable practices date back to 2007. The state is finally resolving the situation now, as McKenna makes a run for governor on a campaign highlighting his consumer advocacy as attorney general.

McKenna's a Republican and Real's founder and chairman, Rob Glaser, is a prominent Democrat who hosted President Obama at Glaser's Seattle home in 2010.

McKenna spokesman Dan Sytman said the case isn't politically motivated.

"These matters have nothing to do with politics," he said. "They have to do with righting wrongs that consumers bring to us and those cases are resolved in the length of time that is dictated by a legal process and by both parties."

Asked why the state didn't engage until 2010, Sytman said the office's complaint database - which goes back to 2005 - shows the most complaints between 2007 and 2009.

"We responded based on a significant uptick in complaints and a pattern of consumer frustration with how Real handled them," he said via e-mail.

Real is paying $2.4 million, including $2 million to a pool to provide restitution nationally for consumers who were "victimized" during a three-year period before December 2009 when the practices were most common, according to the AG's announcement.

The state listed conditions that Real agreed to under the settlement. As described in the release, they are:

-- Stop using pre-checked boxes to obtain consent from consumers to purchase products or services.
-- Stop offering free-to-pay conversions that do not clearly disclose all the terms of the offer, including subscriptions automatically charged on customers' credit cards.
-- Provide an online method of cancellation so that consumers may easily cancel their subscriptions.
-- Send e-mail or other reminders that consumers are enrolled in a free-to-pay conversion, along with instructions for how to cancel the subscription.
-- Cancel subscriptions within two days of a consumer's request to do so.
-- Inform consumers who have called to cancel a subscription of additional subscriptions on their account.

Seattle's Jennifer Horwitz was among the people who had trouble with Real.

"RealNetworks didn't dispute that I had canceled their service before the free trial expired but when I asked them for a refund, they refused," she said in the release. "I had to fight my way up the chain of command. They continued to stonewall, only agreeing to a partial refund 'as a courtesy to me.' I believe this was calculated to make a profit by misleading consumers and taking money they were not entitled to."

Real said that it has created a "customer bill of rights" that explains how customers can expect to be treated by the company, which also set up a new web site explaining its position.

Per the settlement, the company set up a website and phone line for consumers to obtain restitution. It's open to "certain U.S. customers" who enrolled in Real subscription products between Jan. 1, 2007, and Dec. 31, 2009.

Real continues to provide consumer services but the focus of its business is increasingly software and services provided to other companies. Last year it lost $35 million on sales of $336 million.

To find out about restitution, visit or call 866-229-7802.

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November 29, 2011 3:10 PM

Rhapsody melds with Napster Thursday, free concert next

Posted by Brier Dudley

Seattle streaming music pioneer Rhapsody has a few milestones to celebrate this month.

On Thursday it's completing its merger with Napster, and shifting Napster subscribers over to the Rhapsody streaming music service.

Then on Saturday, Rhapsody celebrates its 10-year anniversary. On Dec. 3, 2001, the company, then based in San Francisco, launched its service providing subscribers unlimited access to a huge online music catalog.

Rhapsody moved to Seattle after it was acquired by RealNetworks in 2003, which then spun Rhapsody off as a separate company in April 2010. Rhapsody now has 170 employees, including 120 at its headquarters in Seattle; The rest are in San Francisco and New York.

The company is celebrating its anniversary with a concert at the Seattle Showbox next week -- featuring Built to Spill and other acts -- for employees, industry partners and others. The company's also offering a limited number of free tickets to the public (21 and over) here.

Rhapsody can't party too much, though. A resurgence of interest in online music services has brought new competition from newer players like MOG and Spotify and tech giants like, Google and Apple.

But Rhapsody President Jon Irwin said the company is thriving, having ridden through the advent of the iPod, smartphones and wireless networks capable of quality music streaming.

"Not ony were we first but by virtue of that, we've been around the longest. We're in probably a stronger and healthier state than anytime in our history, and we're still leading the market in terms of introducing change," he said.

Irwin wouldn't provide an update on subscriber numbers, beyond the 800,000 that Rhapsody disclosed this summer, but said, "I'm pleased with where we are." A partnership with MetroPCS that makes Rhapsody available to its Android phone users is adding subscribers, as will the Napster merger, which was first announced in October.

Meanwhile, Spotify announced last week that it reached 2.5 million paying subscribers, up from about 2 million when the European company launched its U.S. service this summer, offering limited free service and upgrades to paid subscriptions.

Irwin didn't comment directly on Spotify's growth but said Rhapsody's business is more sustainable. "We're not going out and relying on huge chunks of venture capital to fund free models," he said.

Looking ahead, Irwin expects the number of music tracks streamed to grow from hundreds of millions to billions and trillions.

But will Rhapsody still be independent, or part of a larger company, 10 years from now?

"Anything's possible," Irwin said. "If we continue to innovate and develop a great product, potentially that changes. What I want to do is continue to operate the business the way we've been operating it."

Comments | Category: Digital media , RealNetworks , Rhapsody |Permalink | Digg Digg | Newsvine Newsvine

October 3, 2011 10:34 AM

Rhapsody buying Napster, Best Buy gets part of Rhapsody

Posted by Brier Dudley

In response to growing competition in the subscription music business, Seattle's Rhapsody is buying Napster from Best Buy.

As part of the deal, Best Buy is getting a minority stake in Rhapsody, which was spun out of RealNetworks last year.

Rhapsody and Napster are the two largest "premium" subscription music companies in the U.S., the companies said. Combined they may stand a better chance against a wave of new and retooled music services being rolled out this year.

Thumbnail image for RhapsodyJon.JPG
"This deal will further extend Rhapsody's lead over our competitors in the growing on-demand music market," Rhapsody President Jon Irwin said in the release.

The sale is expected to close on Nov. 30, after which Napster subscribers will be shifted to Rhapsody. The notorious Napster brand will be dropped.

Napster's selling price and the combined total subscribers weren't disclosed.

The deal cements Rhapsody's position as the largest provider of "all you can eat," paid subscription music services in the U.S. and gives it a toehold in Europe, where Napster has a presence.

It also comes as the company faces new competition from younger challengers such as Spotify, Rdio and MOG.

At the same time, Netflix-era consumers may be warming up to the concept of paying about $10 a month to access huge online music libraries from computers, mobile devices and connected stereos.

Irwin said in an interview that Rhapsody is interested in additional acquisitions "that make sense" and further its growth.

"We're going to go after those aggressively," he said.

Consolidation was inevitable and could lead toward larger deals by Internet giants whose online music services don't have as much traction.

As smartphone and Web tablet use soars and mobile broadband proliferates, Microsoft, Google, and Apple will all vie to store and stream consumers' digital music collections on their networks.

Google, Amazon and Apple each introduced "cloud" services that provide online storage and access to digital music this year, but they don't yet offer all-you-can-eat subscription services. Microsoft has the Zune music service that's linked to Windows Phone and Xbox consoles and, with the upcoming Windows 8 operating system, it's going to put a bigger emphasis on storing, syncing and streaming digital content.

The Napster deal likely gives Rhapsody more than a million customers -- with esablished billing relationships. That will make it a more appealing acquisition target or at least give the company enough heft to compete with the big players.

Asked about the acquisition potential, Irwin said: "Our focus is going to be 100 percent on growing, providing the music experience for our customers and building value in the service we deliver for them."

His comments in the press release emphasized the importance of scale.

"This is a 'go big or go home' business, so our focus is on sustainably growing the company," Irwin said.

Scale also benefits the new social features the company added, including its new partnership with Facebook, he added.

Rhapsody has about 800,000 customers and expects to break even later this year. It lost $7 million on sales of $32.5 million in the quarter ending March 31. It has 150 employees -- including about 120 in Seattle -- and has sales of about $130 million a year.

Streaming music plans are increasingly bundled with cellphones, and Rhapsody's major focus lately has been expanding partnerships with carriers such as Verizon Wireless.

Napster began as a rebellious music sharing site that was shut down by record companies, but the brand lived on after software company Roxio bought the brand name in a 2004 bandkruptcy sale.

Napster then was built into a subscription music service that had about 700,000 paying customers when it was sold to Best Buy in 2008 for $121 million. At the time Best Buy was hoping the deal would help it better compete with Apple's iTunes store for music buyers.

Apple has continue to lead digital music sales but it's been slow to develop a subscription offering. It acquired streaming music provider Lala in 2009 but discontinued the Lala service.

Napster employs about 120 people, most at its offices in Los Angeles and San Diego. There are likely to be significant layoffs, as Rhapsody plans to close the Southern California offices.

"We'll be working with the Napster team to migrate the customer base and, to the extent that there are openings for Napster employees to join the team, we'll be discussing those opportunities with them," Irwin said.

The music libraries offered by Napster and Rhapsody mostly overlap so customers aren't likely to see much change. Napster subscribers will have their favorite tracks and other saved lists shifted over to Rhapsody after the deal closes.

Rhapsody's business, meanwhile, should continue growing through partnerships and acquisitions, Irwin said.

"I like our position -- I like where we're sitting," he said.

Comments | Category: Digital media , Facebook , Microsoft , RealNetworks , Rhapsody , Telecom , Zune |Permalink | Digg Digg | Newsvine Newsvine

June 29, 2011 7:00 AM

RealNetworks Unifi cloud service launches, in Germany

Posted by Brier Dudley

RealNetworks is finally launching Unifi, the online media storage and streaming service that it unveiled last December.

But to start it's going to be available only in Germany, through Vodafone Germany. A U.S. launch is planned for sometime in the fall, when it will be sold directly to consumers and through phone companies.

Real began talking about Unifi last year and planned to launch the service in the first quarter, which would have put it ahead of "cloud locker" services recently announced by Apple, and Google.

"Real's direct-to-consumer product was delayed by one quarter in order to ensure a successful launch with Vodafone," Real spokeswoman Barbara Krause said via email.

Unifi creates a "single, unified catalog" of users' digital media and consolidates it online, so it's accessible from PCs and connected devices such as smartphones. It also has Android and iPhone applications for automatically saving photos to Unifi, streaming music from an iTunes library to an Android device and sharing photos with Facebook.

Vodafone Germany is selling tiers of Unifi service and different storage capacities. A plan with 10 gigabytes of storage costs 2.99 Euros per month, a 30 gig plan costs 4.99 Euros and a 70 gig plan costs 9.99 Euros.

It works with Windows, Macs, iOS and Android. BlackBerry service is coming this summer, the release said.

Here are a few screenshots -- in German -- with pictures taken near Real's headquarters by the downtown Seattle waterfront.

The PC homescreen:


Unifi on Android:


Photos on the PC console:


Mapping of photos stored with Unifi:


The Unifi media player when minimized on the PC:


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June 27, 2011 9:48 AM

Rhapsody needs to turn up the volume

Posted by Brier Dudley

There's a new game you can play if you're following the recent hype around online music services.

It's like "Where's Waldo?" But instead of looking for a little guy hidden in a complicated picture, you look for a proud company that's vanished from the industry it helped create.

I call this game "Where's Rhapsody?"

Remember Rhapsody? It's a Seattle-based subscription music business that started a decade ago, was acquired by RealNetworks and spun off last year as a stand-alone company.

Rhapsody has 750,000 subscribers paying $10 per month for unlimited access to its online library of about 12 million songs. It streams music to devices, PCs or Web-connected audio gear. It has 150 employees and about $130 million in sales..

I'm a fan. For that $10, I get unlimited access to a vast collection that plays with no ads or limits on how many times I can play a particular song. For $5 more per month, I can download songs to a smartphone (and hear them played through tiny speakers until the battery ran out faster than usual ... ).

It's like Netflix for music, but with a far better selection -- and new releases.

You'd think Rhapsody would be a service against which newcomers are measured.

But in recent months, as new music ventures turned the hype volume up to 11, Rhapsody seems to have pressed a giant "mute" button.

Since May, Apple, Google, and Best Buy unveiled new "cloud" music services without a peep from Rhapsody.

Midsize companies in the business are soaring. Online radio service Pandora went public two weeks ago; its stock didn't fare well, but the money-losing business still ended up with a $2.5 billion market capitalization. British subscription music service Spotify simultaneously raised $100 million, arming it for a U.S. debut and direct challenge to Rhapsody later this summer.

I caught up with Rhapsody President Jon Irwin to find out what's been going on. (I took the picture below last year at Rhapsody's new Seattle office.)

"We're staying the course," he said. "These new entrants are simply validating the space -- they're moving in a direction where we've already been and our products are already going."

Rhapsody has been working to fully sever itself from RealNetworks, building capabilities such as its own billing system. That was completed a few months ago.

At the same time, Rhapsody has been redesigning its website and building new features. The redesign's been in beta testing and went live last week.

In a nod to Pandora, there's a "Radio" link that's basically a different name for the curated collections of music that had been called Rhapsody "channels."

Social networking features are coming in late July, enabling users to share and "Like" songs, Irwin said. Spotify now has an edge here. Its users can share playlists on Facebook (although they're not really giving friends music -- the friends have to be using Spotify, which is where the playback happens).

Also in the works is a "sync" feature that will scan users' offline music collection and add those songs to their online Rhapsody collection.

Synchronizing online and offline music collections is a big selling point of "cloud lockers" that Apple, Amazon and Google are rolling out. But these are very different offerings than Rhapsody's "all you can eat" service. The cloud lockers are mostly designed to store and stream music that you've bought, or will buy from the cloud companies.

Rhapsody lost $7 million on sales of $32.5 million in the quarter ending March 31. Irwin said it's in "fantastic shape" and accumulating cash that could eventually be used for acquisitions or international expansion.

"We are break even and moving toward profitability the back half of this year," he said.

Irwin believes that all the new entrants will help Rhapsody, because people will get more accustomed to subscription music services in general. I think he's right, that people are getting used to paying $10 a month for services such as Netflix, which provide convenient and legal access to premium content.

But I'll bet people will be confused by the different options, and they're not likely to subscribe to multiple music services. If they decide to start paying a monthly fee for online music, they'll decide among well-financed newcomers bombarding them with promotions, tech giants with household names and, perhaps, Rhapsody.

Irwin is undaunted. Rhapsody has a critical mass while other players in the U.S. are "nowhere near the scale they need to be profitable, and it's a very expensive proposition to close the gap," he said.

Rhapsody also is making deals with wireless companies to offer and bill for its service. Irwin said that's exposing Rhapsody to "not hundreds of thousands, but millions, of customers."

"The best way for me to position Rhapsody for additional value creation is to continue to deliver a great service and innovate on the product side," he said.

That's fine, but it may be time to start watching for Rhapsody to be acquired by a larger company.

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March 28, 2011 4:05 PM

RealNetworks CEO abruptly quits, stock dives

Posted by Brier Dudley

Barely a year after taking the job, RealNetworks Chief Executive Bob Kimball has resigned, the company announced today.

Kimball was in the process of restructuring and rebuilding Real, which has zigged, zagged and lurched through several management changes over the last two years.

Real announced the change after regular trading closed Monday. Its stock dove today after the market opened. At last check it was down 7 percent, to $3.67.

Company executives said Kimball left on his own accord after largely completing the restructuring. They said he decided after more than a decade at Real that he wanted to do something else and spend more time with family.

The move comes as Real's entering an intense several years that will test its plan to operate as a smaller company that's more focused on phone companies and other business customers, as well as games and consumer services.

During Kimball's tenure, the company also developed a new online media service that may compete with upcoming media services from, Google and Apple, but the company's stock has bobbed below $4 for most of his tenure as chief executive.

During 2010, sales fell 29 percent to $401.7 million and the company reported an operating loss of $34.5 million. Its margin improved to 64 percent, up from 60 percent the year before, when it lost $237.2 million.

A former IBM attorney, Kimball was Real's chief lawyer for 10 years until founder Rob Glaser resigned as chief executive on Jan. 13, 2010. Kimball stepped in as acting chief executive, then was chosen as the permanent replacement.

Glaser said he's not interested in becoming chief executive again and will remain chairman. He praised Kimball, saying "he's been associated with some of Real's most important and exciting developments."

"I'm hightly empathetic to the fact there comes a time when you want to step back and get on a different boat," Glaser said.

Kimball is "a great guy and the company will miss him but we built a strong bench, we built the company up for success particularly in this next chapter," Glaser said. "I think it's fair to say that's a different kind of animal and it's something where you need to sign up for a three, four-year cycle around that."

The transition shouldn't slow Real's rebuilding, Glaser said. Hiring a new executive from outside the company is actually "likely to accelerate change," he said.

Kimball wasn't available for an interview but issued a statement in the press release, saying that he "took on this role to lead a restructuring and transformation of RealNetworks into a more lean, efficient and effective business and we have completed that phase of RealNetworks' transformation. Over the past year we have simplified our business, removed more than $70 million in annualized operating expenses and created an entirely new, award-winning product called Unifi. We are delivering on our promise to build products people love."

Real's executive vice president, Mike Lunsford, 43, will serve as interim chief executive while Kimball's replacement is found. Lunsford said he's not interested in the permanent job.

Lunsford (left) was interim chief executive of Earthlink before joining Real in 2008. He has led the company's core business including RealPlayer, Helix and enterprise messaging services provided to phone companies.

Lunsford also recently began leading Unifi. The service is close to launching with phone company Vodafone Germany and a U.S. launch is planned for mid summer.

No major changes are planned while a new chief executive is found, "to keep things consistent and stable here," Lunsford said.

There was no fallout that led to Kimball's resignation, Lunsford said. "No, this is entirely Bob's doing," he said. "We've had a difficult year with the restructurings, resimplification, all those things. Signing up for the next part - which is the ongoing and hard work to grow the company - is just a daunting task for anybody."

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December 16, 2010 9:39 AM

RealNetworks CEO on Unifi, restructuring and more

Posted by Brier Dudley

RealNetworks' business has zigged and zagged so many times in its 15-year history that it's hard to get too worked up about the company's latest restructuring.

But after spending an hour with Bob Kimball, the former company lawyer who took over as chief executive last January, I think I understand where the company's now heading.

It's also getting interesting again, but for different reasons.

The 1,400-employee Seattle company is no longer revolving around a streaming-media player and feuding with Microsoft and Apple.

Real is rebuilding and morphing into a hybrid. It still offers RealPlayer and other media products to consumers, but it's making most of its money providing software and services to mobile-phone companies.

More than half its revenue now comes from about 90 carriers around the world.

This isn't as glamorous as the early days, when Real was one of the biggest names in digital music and video. That's now ancient history.

But I wouldn't write Real off. There's a long tradition of Seattle companies quietly building big businesses that provide technology to phone companies.

Netflix, YouTube and Hulu may be the big consumer brands in streaming video. But Real's now powering the on-demand video services that Verizon and AT&T offer to their mobile customers.

Real is also sending about 1.6 billion text messages per day for wireless companies, routing them through servers in Seattle.

The company also makes money from RealPlayer and plans to make more from a new online-media-handling service called Unifi, which it's launching in early 2011.

Unifi will collect and catalog users' music, photos and videos and store them online, where they can be streamed to phones, computers and other devices.

It will also reflect the new RealNetworks.

It's a consumer service that Real will offer directly. But Real is also offering the service to mobile-phone companies.

Real's big advantage nowadays is being able to offer digital-media products that reach both sides of the market, said Kimball, 46.

"Very few companies have that kind of heavyweight carrier-grade service plus a huge consumer channel," he said. "Finding the right products that can be sold through both channels is a unique advantage that RealNetworks has and we want to take advantage of that."

Here are edited excerpts of my interview:

Q: Where are you in the restructuring process - are you almost done?

A: I really do feel like we have the lion's share behind us and plan to finish the remaining work in the first half of 2011. I want to get to the point where we can simply say we have the right size and shape, operational structure for the business we have and foresee growing over time.

Q: Which products will grow in 2011?

A: If you look at the games business, we have a very nice footprint in casual games. We've got strength really in online, download, mobile and we're starting to grow in social [gaming] ... that's an area where we can get some decent growth in the core business in 2011.

I also think that where we are in the software-as-services business to carriers is a good place to be. Carriers are really driving a lot of usage and a lot of new and different media experiences for consumers.

Q: Are you still going to spin off the games business?

A: We don't want to separate it until we have it ideally positioned for the kind of growth and potential that business has. So, yes, the long-term goal is still to separate but I'm in no rush because it's a good business, it's a quality business, and I'd like to get that business into a sequential-growth profile before really looking at separating.

Q: The carrier business, could that be separated? Could you spin off everything?

A: Well, anything's possible in theory. Our focus is really on trying to get the most leverage for the combined set of assets we have. There is value in having, for example, this combination of a strong carrier channel with over 90 carriers worldwide, plus a strong direct to consumer channel with our games business and RealPlayer business. It enables us to sell products like Unifi ... through both channels.

Q: I didn't realize Unifi would be sold through carriers.

A: We absolutely plan to sell that through carriers. They're very excited about what it can do for them in terms of subscribers, churn, keeping them relevant in the media space.

Q: Do you have regrets about spinning off Rhapsody [music service] in April? It would seem to fit well with Unifi.

A: Personally, yes, it's very sad for me to see them leave. On a business level, no, that was absolutely the right decision for the business to simplify what we're doing and focus on what we do best.

Q: Are carriers looking at Unifi as an alternative to iTunes and Windows Media Player and Zune services?

A: I think they like this idea of having something that's universal and supports multiple, different clients. This is going to work whether you're an iTunes user or Android user.

Q: Do people know Real's doing these carrier services?

A: I happen to know they don't because I've just come from several weeks of traveling around the country and meeting with investors and press, talking about RealNetworks. It's amazing how often it comes as a surprise to people that the RealPlayer's not actually our biggest revenue stream, it's carrier service â€" white label carrier services.

Q: There's a lot of focus on streaming video. Real was going there 15 years ago.

A: It's often been a company literally ahead of its time. One of the things we need to figure out is how to capitalize on being first to markets that are still nascent. I feel like there have been situations where we were first in line but didn't end up with the big business win in the long run. We've got to find a way to change that so when our innovation gets us first to market, we hold that position as the market grows and becomes significant.

Q: So what happened? Why aren't you Hulu today, or Netflix?

A: That's a deep historical look ... where at this point I'm trying to get the company looking forward. It's really time for the business to look over the horizon into the future.

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December 7, 2010 11:35 AM

Dive Into Mobile: RealNetworks shows "Unifi" media service

Posted by Brier Dudley

SAN FRANCISCO -- RealNetworks Chief Executive Bob Kimball took the stage at the Dive Into Mobile conference to give the first public demonstration of "Unifi," the Seattle company's new cloud media service.

The service will "catalog" users' media collections and make them available from any device connected to the Web, eventually.

"We actually show you your whole digital life and let you work with it," Kimball said.

Initially the service will handle music and photo files and work with computers and Android and iPhone devices. Later it will work with BlackBerry and Windows Phone devices.

It also pulls photos taken from mobile devices into the cloud repository, where they're available from different devices.

It will launch in the first quarter, Kimball said. The basic service will be free but have limited online storage. Additional capacity will be available for the price of "a cup or two" of Starbucks beverages per month, he said.

A few images of Unifi, taken from the big projection screen. The first shows the desktop interface; the second is Unifi running on an Android-based tablet.



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December 2, 2010 3:48 PM

RealNetworks resurfacing with new media service

Posted by Brier Dudley

A new cloud service for managing media will be unveiled by RealNetworks at a tech conference next week, the company's first major new consumer product in years, according to a CNET report.

Real Chief Executive Bob Kimball gave CNET a few hints about the service, which is to l be demonstrated at the Dive Into Mobile conference that begins Monday in San Francisco.

CNET's report said the "as-yet unnamed" service includes client software for computers and mobile devices "that will watch for new content they store on them; and a Web service that can collect that media and stream or load it to any of the devices the consumer owns."

It sounds like a personal cloud media library/storage service that will work with different software platforms and theoretically make it easier to access your collection of music, videos and photos from different devices. It also sounds like a cousin of Microsoft's "three screens and a cloud" approach to digital media services.

Kimball told CNET the service won't be a huge boost for Real's business, since consumer sales are just small fraction of its sales nowadays, but it could introduce Real to some new users.

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September 14, 2010 2:08 PM

RealNetworks buys B.C. game shop with Facebook skills

Posted by Brier Dudley

As part of its effort to build up its GameHouse platform, RealNetworks today bought a social-games company in Victoria, B.C.,

Backstage Technologies -- which worked on the Facebook version of "Family Feud" -- has expertise engineering and monetizing games for social platforms, Real said in its release.

The purchase price wasn't disclosed; Real said it won't materially affect Real's sales or earnings in 2010.

Real Chief Executive Bob Kimball's release quote:

"As we transform RealNetworks, we will focus on areas with strong revenue growth and profit potential that will realize the value of our core businesses. The most compelling growth opportunity in games today is social games, and this acquisition is part of our commitment to make our entire GameHouse business social."

Backstage has 18 employees, who will remain based in Victoria. Its catalog includes "Pull Tabs," "Scratch and Win," "Slots" and "Vinyl City."

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June 22, 2010 1:38 PM

RealNetworks reorganizes again, cuts 85 jobs, renting space

Posted by Brier Dudley

RealNetworks is consolidating two of its remaining businesses -- technology products and media software and services -- in a move that's also cutting 85 jobs, the company announced this afternoon.

With offices clearing out, Real is planning to sublease part of its headquarters above the downtown Seattle waterfront. The company also pulled its GameHouse studio out of Pioneer Square and into its headquarters office a few weeks ago, an interim move until the games business is spun off into a separate company later this year.

The layoffs include about 25 percent of Real's executive ranks, the company said, explaining that its "new organizational structure is designed to reduce the spans and layers of management to create greater efficiency, teamwork and customer focus."

"This reorganization marks a significant milestone in our transformation of RealNetworks," acting Chief Executive Bob Kimball said in the release. "Restructuring RealNetworks into functional groups creates a far more efficient organization focused on developing great products that can be delivered through any of our distribution partners."

Real is also cutting back on its office space at its Seattle headquarters and in Europe and Asia. It's going to take a restructuring charge of $10 million for the quarter ending June 30, including a $7 million loss on excess office space and $3 million for personnel adjustments.

After the cuts, RealNetworks will have 1,365 employees, down from 1,700 before Kimball began a major restructuring of the company in February. That shuffle involved founder Rob Glaser, who stepped down as chief executive.

Even before the current wave of restructuring, Real's been whittling its employment with periodic layoffs as its business slowed in recent years. It laid of 130 in December 2008 and 20 in February 2009.

About 75 percent of the latest layoffs are happening in Seattle.

Real's stock closed at $3.50 today, down 3 percent, before the layoffs were announced.

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May 26, 2010 11:20 AM

VC updates: Rob Glaser joins Accel, Entress to Founders Co-op

Posted by Brier Dudley

Following the path of other wealthy, semi-retired tech entrepreneurs, RealNetworks founder Rob Glaser is joining Palo Alto, Calif.-based venture firm Accel Partners as a venture partner.

Glaser will mremain in Seattle, where he'll look for promising investments in the Northwest for Accel and commute as needed to Palo Alto. He's particularly interested in the intersection of mobile and social companies, and will work as an adviser to existing Accel companies, a spokeswoman said.

Accel was an early backer of Real, investing in the company in 1995.

"Rob's extensive experience as a digital and social media pioneer should prove to be an asset for Accel's renowned and growing technology portfolio," Accel Managing Partner Jim Breyer said in a press release.

In other VC news, Voyager Capital partner Geoff Entress has joined Seattle's Founders Co-op as general partner. He'll stay with Voyager while helping Founders founders Andy Sack and Chris DeVore lead the seed-stage venture fund they started in 2008.

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March 31, 2010 2:55 PM

RealNetworks lays off 60 as part of restructuring

Posted by Brier Dudley

With its spinoff of the Rhapsody music business nearing completion, RealNetworks is laying off 60 people, or about 4 percent of its 1,700 employees.

Most of the affected employees are in Seattle. They include people supporting the Rhapsody business, as well as a employees in other groups.

Interim Chief Executive Bob Kimball announced in February a dramatic restructuring of its business, including the spinoff of the Rhapsody subscription music service and eventually Real's games business.

Whether that results in additional layoffs remains to be seen. The company's periodically laid off employees as its business slowed in recent years.

"It's too early to speculate on what's gong to happen next, but Bob and the management team are focused on the mantra of simplify, restructure and grow," spokesman Bill Hankes said.

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March 10, 2010 9:25 AM

Glaser on mobile biz, Apple and the Sesame Street problem

Posted by Brier Dudley

In his first public speech since stepping down as chief executive of RealNetworks in January, Rob Glaser addressed the Mobile Breakfast event at the Seattle Marriott this morning, talking about changes he sees over the next five to 10 years.

Glaser said the rise of "superphones," mobile applications and the digitization of our lives (as described by John Battelle's "database of intentions") have created several business opportunities to pursue.

One is around the notion of "digital persistence," the expectation that once you create something digital you expect it to be available everywhere. Another involves providing users with universal access to their digital content across different devices. The third is making it easy to search and discover content.

"There's no question we're getting to that phase where consumers are going to expect this stuff, 'it just works everywhere,' " he said.

As an example, he mentioned an incident last year with his son, who was then 2 1/2 years old. They were in the bathroom watching "Sesame Street" on a TV that didn't have a digital video recorder attached.

The son prefers the animated portions of the show over the live action segments, one of which came on while they were in the bathroom.

"My son looked at me and said, 'Make it go back, go back.' I explained to him this is regular television; regular televison doesn't go back," Glaser said.

"The kids that are born this millenium -- they just assume all this stuff, that it's a cloud of video, they can go back and get it."

Still to be determined is whether the next evolution will come from vertical companies like Apple or a more open, horizontal industry approach. Glaser argued that the vertical approach will result in a "much lower pace of innovation."

To avoid having carriers become commoditized into dumb pipes and handset manufacturers scrambling for the low end of the market "it's incumbent for all of us to work together and reach across segments ... otherwise vertical's going to remain on the march."

Despite Apple's huge success, it's still unclear which approach is going to dominate in the coming years.

"I dont think it's inevitable which way its going to go -- it's still very much a jump ball," he said.

"Whereas the PC went horizontal and the MP3 player went vertical, I think it's an open question whether the industry pulls together and makes the horizontal experience as good," he added later.

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February 9, 2010 1:34 PM

RealNetworks spinning off Rhapsody, plus the CEO's e-mail

Posted by Brier Dudley

RealNetworks just announced that it's going to restructure Rhapsody and spin the subscription music service off into a standalone company.

Real is the majority owner of Rhapsody, which is also partly owned by MTV. The venture was formed after Real bought Rhapsody -- formerly known as -- in 2003 for about $36 million.

Rhapsody sells monthly subscriptions starting at $13 providing unlimited access to a vast library of digital music.

The subscription approach didn't catch on while Apple dominated the music business with a model selling individual tracks, but some have speculated Apple could enter the subscription business itself and invigorate the approach. Meanwhile, subscription ventures are in fierce competition with ad-supported services offering free music online and competitors such as Best Buy's Napster service that undercut Rhapsody's price.

Subscriptions to Rhapsody have settled to about 700,000 after peaking at more than 800,000 in the first quarter of 2009.

The spinoff is the first major change since a Jan. 13 executive shakeup in which founder Rob Glaser passed chief executive duties to chief counsel Robert Kimball. That was presented as the beginning of an effort to restructure Real to focus on core businesses.

Real's remaining operations include its music business selling digital content, ads and other subscriptions; PC and mobile games; media software including RealPlayer and technology services and products sold to corporations.

"Separating Rhapsody into its own independent company is a significant first step in making RealNetworks a more focused and profitable company," Kimball said in a release. "Rhapsody will be the largest pure play digital music service in the market. We have provided Rhapsody with the right team and financial and intellectual property assets to succeed in the competitive market for digital music."

Rhapsody will be based in Seattle and have about 150 employees, including current Rhapsody staff and some members of Real's music group, which will move to the new company. The total includes a San Francisco office that has fewer than 50 employees.

Employees were notified during a music group meeting about two hours ago and by an e-mail from Kimball.

It's a complicated deal -- Kimball told employees today, "It was brain surgery trying to disentangle a decade-old music business from the rest of Real" -- but basically Real and MTV's parent company Viacom are unwinding a partnership that split their ownership of Rhapsody 51 to 49 percent.

When it's done, sometime in the first quarter, both companies will own an equal number of shares in Rhapsody. Real is contributing $18 million and the Rhapsody brand, and MTV is contributing $33 million worth of advertising support (and canceling a $111 million advertising commitment to Rhapsody).

How the deal will affect Real's earnings will be discussed further in a conference call with investors on Thursday, spokesman Ryan Luckin said.

Asked if Rhapsody is being positioned to go public or be acquired, Luckin said the plan is to set the venture up to operate as a standalone business.

"It's got the IP [intellectual property] and the cash to go forward and try to be successful in the digital music space," he said.

At the end of 2008, the Rhapsody America venture with MTV had lost $17.8 million and had remaining equity of $384.3 million, according to Real's November's earnings report.

Being removed from the RealNetworks umbrella will give Rhapsody more flexibility to partner with other companies, Luckin noted.

Subscribers to Rhapsody won't see a change, he said.

Here's the e-mail Kimball sent to employees:

Continue reading this post ...

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February 4, 2010 5:30 AM

Isilon posts first profit, aims for $1 billion, CEO says

Posted by Brier Dudley

Many tech companies are emerging from the downturn in better shape than before, but the turnaround for Seattle's Isilon Systems is striking.

The storage-system manufacturer Thursday is reporting its first profitable quarter - by a hair - and record sales of $37.5 million, up 18 percent from the same period last year. It's reporting a profit of $140,000, after losing $4.3 million a year ago.

Whether the profitability continues remains to be seen, but founder and Chief Executive Sujal Patel characterized the quarter as a turning point for the company he started after leaving RealNetworks in 2001.

"For us this is a pretty significant step because it really leaves 2009, a year where we were playing defense, behind and sets us up to play offense in 2010 and really grow this business aggressively," he said.

Isilon went from Wall Street darling and the state's largest IPO in 2006 to an outcast of sorts after it missed projections, fumbled its expansion and was accused by the SEC of inflating sales reports.

Continue reading this post ...

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January 18, 2010 12:00 AM

Q&A: Rob Glaser on leaving Real, politics and why Apple leads

Posted by Brier Dudley

Today's column is a Q&A with RealNetworks founder Rob Glaser on his departure as chief executive, plans for the future and outlook for the digital media industry.

Here's a longer version with more Q&A than what fit into the paper:

Rob Glaser's resignation last week from RealNetworks seemed abrupt, but it was actually in the works for several years.

Glaser said he had the first "serious conversation" with Real board members about stepping down more than two years ago, not long after his first kids were born.

But the discussion was interrupted before it went too far.

"When the great recession hit, I just put my head down and I'm like 'I can't even think about this for 2008, most of 2009. I've just got to focus on helping the company through this rough period of time,'." Glaser said Friday in a wide-ranging interview about his past, future and final days running the pioneering Seattle digital media company he founded in 1994.

Glaser, who turned 48 Saturday, stepped down as chief executive Wednesday afternoon, then flew to Washington, D.C., for a White House meeting with a group of executives providing advice on federal technology spending plans. It was the longtime Democrat's second visit in the last month; President Obama also invited him and his wife to a Christmas party in December.

On Friday, Glaser was back in Seattle, reflecting on where he and the digital media industry are headed next. He already helped Real develop a new strategy that will be revealed in a few weeks by Bob Kimball, its general counsel and now acting chief executive.

Glaser has been under pressure from investors who watched Real's leadership position and value erode over the past decade. But he characterized the decision to find a new chief executive as his, and one made amicably.

"I feel very, very happy with the decision," he said. "It's something I wanted to do for a long time. I'm very proud of the company and thrilled I get to stay associated with the company in my capacity as chairman, a signicantly shareholder."

Here's an edited transcript of the interview:

Q: It seemed abrupt when you stepped down and immediately left town.

A: Literally, I sent the message to employees and did the final tweeting of it sitting on the plane going to D.C. It was one of those photo-finish kind of deals.

Q: You said you'll get more involved in civic projects. Like what?

A: There are two or three projects associated with the [Glaser Progress] Foundation that I'm very excited about. There's some AIDS relief work we're involved with in Rwanda, a team on the ground in Kigali that does amazing work. I'm hoping to get there this summer. That's an example. Rather than going to Rwanda every five years maybe I can go every one or two years now.
After our kids were born in 2006 I pulled back. I have not engaged in much of that because my life was 110 percent full being a husband and a dad and my day job.
Before 2006 we would give two, three or four political fundraisers a year; since then we've probably given one a year. To some extent it's about getting back to the level of civic engagement I had before we had kids.

Q: Will you run for office?

A: I think that's pretty unlikely. As much respect as I have for [politicians]) and as mch respect I have for the importance of what they do, I'm not sure that role on an executive level or a legislative level is the best fit for me personally.
I think you've got to say 'never say never' when you're 48 years old, and you've had the incredibly lucky life that I've had, but I would say it's definitely in the unlikely category.

Q: What's next for Real?

A: We kicked off a strategy process in the middle of last year, the most thorough and rigorous review in the company's history. We did great work. Bob and the team will talk more about it soon, when the time is right. It's not my place to initiate the discussion about it.

Q: Is there animosity between you and the board?

A: These are people I've known for a long time . The right way to think about this is, once you decide to do something like this, the interesting debate is, "Do you do it slow or do you do it fast"?

Q: Looking back, what are you most proud of, and what would you do differently?

A: I can give you the proudest one: I'm incredibly proud of the team here and the innovation that we've created. I can think of three or four things we've done that had never done before, going back to creating streaming audio 1995, making streaming video practical in 1997, what we did with sort of birthing the casual games industry in the early 2000s, weathering the dot-com crash in some pretty intense competition that might have involved questionable practices from an antitrust standpoint.
But rather than curling up in a ball we weathered that and came out stronger on the other side, pivoted the company in some interesting ways around first consumer services and then carrier applications and services solution like ringback tones and music on demand and video on demand and the like.
There's some stuff in the pipeline that will rival those innovations in my view if we do a good job with it, rolling it out in the market, so I feel like I'm passing the baton at a time where not only did we weather the downturn . The pipeline for where we go next is in great shape.

Q: What's going to happen to the digital media business five years out?

A: Speaking from a conceptual level, when I got involved in this I thought digital media is going to be a 25-year thing, which is to say there's going to be a long period of time before the innovation flattens out. We're 15 years in -- we launched RealAudio in April 1995. The industry as a whole has taken tremendous strides and there's a lot of work to do.
Think of it from a consumer standpoint. You want to be able to watch any piece of video you have a right to watch anywhere at any time. There are pieces of the solution, but the thing you really want is that seamless "it just works." It's not 10 minute videos on YouTube or buying things on your iPhone that you may already own.
There's enough of the pieces in place where you can envision how it all comes together, but it will be three to five years before that seamless thing that Jeff Bewkes of Time Warner dubbed "TV Everywhere." Rhapsody is the best of that in the music world, but today those are not mainstream, seamless experinces that work for tens, 100s of millions of people. Big picture, for audio-video, that's the biggest set of things that I think are coming.

Q: It seems like pieces are falling into place like 3G and 4G networks and cloud services.

A: I would say the barriers at this point are as much business models and alignment of rights as they are technology. I knew it 16 years ago, but I would say I understand it more vividly now. The technology is a necessary foundation element but it's not sufficient.
You have these industries that set up windowing of content, methods of distribution, different rules for rental vs. purchase that make sense in a physical context. But in a digital world you need to harmonize and integrate all those rules and business models and it's a hard thing to do that.
Really, in my view, it's the intersection of the technology and the business model/economics. That's where the complexity lies and frankly where the opportunity lies if you can fit those pieces together in a way that works for everybody.

Q: Why is Apple now the dominant digital media company and not Real?

A: Fundamentally we've been in area where it didn't all work seamlessly. The best way to make it work seamlessly was to go vertical. You make the hardware, you make the software, you connect it to your services. That's a totally different business than the historical business that most companies were in that were in the software-services business.
On one hand, you can count all the companies that have fit all those pieces together. It's a huge undertanking. I'd say BlackBerry pulled it togoether in their space of messaging. Apple's done it twice, first witht the iPod and now with the iPhone/iPod Touch, and you could say Amazon's on the road to doing it with the Kindle.
Think of the IT industry. IBM was vertical. The minicomputer industry was vertical, then the PC came along and it was horizontal. Those of us that grew up in that area made the supposition that the horizontal model was going to the dominant model in this business.
It's very complicated to go from being horizontal -- like Google is or like Microsoft and Real -- to go vertical. There are many successful companies but you have to say that in the digital media space the biggest successes have been these vertical successes. That's something that's incredibly hard for a startup to do.
If I knew in 1995 what I know now, would I have approached the vertical-horizontal thing differently? Maybe, but the wreckage of companies that tried to go vertical - Go/Eo, WebTV, I can go down the list, there are dozens of companies -- it's super, super hard to do that vertical thing. I'm very proud of the success and scale we got to taking the horizontal approach we did.
If you take the long view - the next five or 10 years view -- I think there's going to be a renaissance of that horizontal model as the standards come together to link together all these things.
This next decade, I think it's a very interesting strategic question, which model is going to be dominant.

Q: Has Seattle's opportunity passed?

A: No, I would say the opposite. The Seattle high-tech community is alive and well for sure. Hopefully, we played a role helping seed the ecosystem.

Q: Will you get involved with other companies, as well as civic affairs?

A: I don't know what the mix is going to be yet. I turn 48 tomorrow [Saturday], not 84. I feel like I have time in my life to pursue a mix of things depending in what captures my passion."

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December 2, 2009 3:44 PM

Real VP's amazing saga of getting his band's royalties

Posted by Brier Dudley

Warner Bros. messed with the wrong guy when it sent muddled royalty statements to Tim Quirk, singer for Too Much Joy, a pop band that had some traction in the 1980s and early 1990s and still sells a few downloads.

Warner wasn't saying how much the band was making from digital music service.

But Quirk knew that it wasn't that hard to figure out -- he's now a vice president at RealNetworks, where he helped build the database Rhapsody uses to track how much it pays for whatever music is played by the service.

Even so, it took years and a chance meeting with a Warner executive to get the label to disclose how much Too Much Joy was earning from downloads and subsription services.

Quirk was getting that sort of information from other outlets via IODA, an independent distribution service, but just not Warner.

It was about principle not profit when he finally received a tally last week, Warner reported 20 cents' worth of download royalties and $62.27 of subscription royalties. It doesn't look like the band will ever make enough to recoup Warner's publishing expenses, which stand at $395,214.71.

Quirk -- who used to be a music journalist -- laid it all out in a blog post Tuesday that's a great primer on how money is divvied up by music services and trickles down to bands.

An excerpt:

Here's the thing: I work at Rhapsody. I know what we pay Warner Bros. for every stream and download, and I can look up exactly how many plays and downloads we've paid them for each TMJ tune that Warner controls. Moreover, Warner Bros. knows this, as my gig at Rhapsody is the only reason I was able to get them to add my digital royalties to my statement in the first place.

Another piece:

I knew that each online service was reporting every download, and every play, for every track, to thousands of labels (more labels, I'm guessing, than Warner has artists to report to). And I also knew that IODA was able to tell me exactly how much money my band earned the previous month from Amazon ($11.05), Verizon (74 cents), Nokia (11 cents), MySpace (4 sad cents) and many more. I didn't understand why Warner wasn't reporting similar information back to my band -- and if they weren't doing it for Too Much Joy, I assumed they weren't doing it for other artists.

The wrap-up:

The sad thing is I don't even think Warner is deliberately trying to screw TMJ and the hundreds of other also-rans and almost-weres they've signed over the years. The reality is more boring, but also more depressing. Like I said, they don't actually owe us any money. But that's what's so weird about this, to me: they have the ability to tell the truth, and doing so won't cost them anything.

They just can't be bothered. They don't care, because they don't have to.

Now I've just got to give Too Much Joy a listen.

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September 17, 2009 6:00 AM

RealNetworks opens mobile game platform to indies

Posted by Brier Dudley

To capture a bigger piece of the mobile games business, RealNetworks is courting game developers by offering to distribute, test and adapt their games for multiple mobile platforms.

The company is hoping to attract iPhone, mobile and PC game developers to its new "Federation of Studios" publishing system, based on the company's internal game development tools. It's announcing the program today.

Real would receive a bigger variety of games in return for handling the complexity of developing titles for multiple platforms. The company would also share revenues.

Real's internal tools, which it acquired in 2005 from a Finnish development studio, port games to more than 1,700 handsets. Real also distributes games to most major wireless carriers and direct to consumers.

But the doors aren't being thrown fully open. The company will select which game developers may participate in the program.

"We will review all comers,'' said Charles Harper, general manager of business development for Real's game unit. "We're going to be fairly selective anou who we choose."

Harper said it will take about five weeks to port, test and submit games to various mobile outlets.

The company isn't diclosing revenue share because terms will vary, he said.

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September 10, 2009 10:18 AM

Apple okays Rhapsody iPhone App, but it's pricey

Posted by Brier Dudley

Apple chose not to hassle Real Networks over the Rhapsody iPhone app, apparently. It's on iTunes today, perhaps because Apple expects limited uptake given the price of Real's service.

The app itself can be downloaded for free, but it only streams music from Rhapsody if you pay for Real's $15 a month "Rhapsody-To-Go" mobile service, which is a premium over the standard $13 Rhapsody service and only works with Windows PCs.

(To clarify - if you have the standard "ultimate" service, you can upgrade for $3 more a month to use the app.)

It's a cool application - it streams songs from Rhapsody's library of more than 8 million songs to iPhones and iPod Touches and can be used to create playlists or play Rhapsody radio stations - but iTunes apps generally have to be cheap to be hits. How many iPhone users will be interested in a $15 month music service on top of their already expensive service plan?

Investors seem to think a lot - Bloommberg noted that RNWK climbed as much as 14 percent today on news of the app approval. Wow.

At last check it was up about 7 percent, to $3.63, but maybe Wall Street is more impressed with the buzz around Rhapsody releasing the new Jay-Z album "The Blueprint 3" two weeks early.

The $15 cost isn't shown on iTunes, although the app's description mentions - in the third paragraph - that a subscription is required.

Real provides a seven-day free trial of the mobile service, which is stingy compared to the 30-day trial offered on the desktop service.

Real's announcement said the company will release an Android version later this year and is looking into versions for Windows Mobile, Palm Pre and other phone application outlets.

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August 24, 2009 9:47 AM

Real goads Apple to approve Rhapsody iPhone app

Posted by Brier Dudley

RealNetworks went public today with its pending Rhapsody iPhone application, which will stream music from its 8 million track library to the device and allow users buy MP3s.

Unless Apple decides that Rhapsody diminishes the experience of using iTunes and rejects the application.

Apple and Real have gone at it before, but Real's timing is pretty smart: With regulators looking into its rejection of Google Voice, Apple doesn't need any more bad press about rejecting competitive apps.

Real's also developing an Android version of the Rhapsody application.

The buzz around the Rhapsody app may get more subscribers, but if Real really wants to invigorate its service, it will have to cut the $13 to $15 per month price to compete with Napster's $5 per month offering.

Here's a video of the Rhapsody app that Real released as part of its geurilla app application campaign:

Rhapsody on iPhone from Rhapsody on Vimeo.

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July 21, 2009 9:14 AM

RealNetworks confirms Hulett joining games group

Posted by Brier Dudley

In case anyone needed more confirmation after Rob Glaser's hint last week, RealNetworks today announced that it hired Matt Hulett as chief revenue officer of the company's RealGames North America unit.

Hulett last week disclosed his resignation from Mpire/Widgetbucks, a Seattle Web startup, but didn't say where he was heading next.

Real's announcement said Hulett's new position "will drive the games division's direct-to-consumer and syndication efforts."

Before starting Mpire, Hulett was president and chief executive of Expedia Corporate Travel, president of AtomShockwave and a group manager at RealNetworks.

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July 16, 2009 5:47 PM

Matt Hulett: Back to Real, like Griffey to M's?

Posted by Brier Dudley

When Matt Hulett announced today that he was stepping down as chief executive at Seattle Web startup Mpire, he wanted to wait awhile before discussing his next job.

But by mid-afternoon Xconomy heard whispers that Hulett was going to return to RealNetworks, as chief revenue officer of its RealGames division.

Hulett was the founding consumer products manager at Real before he left to help Mika Salmi found Atom Films in 1998, but he's stayed in touch with Real founder Rob Glaser over the years.

I went to the top for clarification, and this was Glaser's response:

"Isn't it great that the Mariners brought Griffey back after he was away for a decade?"

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June 24, 2009 12:00 AM

RealNetworks going mobile with new RealPlayerSP

Posted by Brier Dudley

A new version of RealNetworks' media player is launching today with features for sharing video files and transferring them to iPhones, BlackBerries and other mobile devices.

Called RealPlayerSP, the software builds on the handy video downloading feature that debuted in the previous version, RealPlayer 11, in 2007. When you're running the player and browse to a Web video clip, a little window appears and offers to download the video.

SP adds Twitter and Facebook buttons, so you can click to share video links on the social networking sites (or simply via email). That's the social part.

The portable part is a new system for transferring downloaded videos to mobile devices. With a few clicks, the player will convert videos to the proper format and transfer them to smartphones; initially supported devices include the iPhone, iPod, Pre, Sidekick, G1, Sony PSP, Nokia N71x, N95 and BlackBerry Bold, Curve, Pearl and Storm.

The transferring has to be done from a PC, with the device connected by a cable. Real's looking into ways to make these transfers wirelessly.

A standard version of RealPlayerSP is free. There's also a $39.99 premium version that supports h.264 video conversion, DVD playback and DVD burning.

This screenshot shows the Facebook and Twitter buttons, and the menu for transferring videos to a device:

Video to Blackberry1.jpg

Here's what a Tweet looks like when you use the Twitter post button. Fortunately Real doesn't require recipients to download the player; they'll get two links - one to the video that was sent and another to Real in case they'd like the player:

Twitter update.jpg

The converter in action:

RPSP Converter.jpg

And the "social" buttons on the task list, within the player's library:

RP Library Sharing.jpg

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February 3, 2009 9:37 AM

RealNetworks announces big write-down, freezes games IPO, cuts staff

Posted by Brier Dudley

RealNetworks is preannouncing big charges it's going take against its Q4 earnings and a few changes:

Continue reading this post ...

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January 30, 2009 10:18 AM

Microsoft, RealNetworks vets join UW tech transfer team

Posted by Brier Dudley

The University of Washington didn't have to look far for two tech veterans to lead its TechTransfer unit that licenses its research.

Today the school announced that it hired former RealNetworks associate general counsel and chief privacy officer, Todd Alberstone, as director of IP management.

It also hired Microsot product management director, Ed Cummings, as a licensing officer to work with computer science and engineering researchers.

The IP portfolio managed by UW TechTransfer has more than 2,200 issued or pending patents and last year generated more than $47 million in revenue, the release said. The technology also contributed the creation of 240 companies.

"Their recruitment represents a critical step toward an increasingly translational research culture, and UW’s ability to make a significant contribution to the local economy and job creation, especially at this critical time, through the formation of start-up companies," Linden Rhoads, vice provost of UW TechTransfer since August, said in the release.

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November 15, 2007 12:00 AM

RealPlayer 11 goes gold today, Mac beta debuts

Posted by Brier Dudley

A complete version of RealNetworks new flagship media player is available today, five months after the company released a beta test version to the public.

Its standout feature is the ability to "rip" videos from the Web with a click and save them for later viewing. When you have the player running and you browse over an online video clip that doesn't have copyright locks, a control appears and asks if you'd like to save the video to the player.

The basic player is free while a premium version with additional features, such as DVD burning of saved videos, costs $40.

New in the final version is the ability to view thumbnail images of saved videos.

Real is also announcing new stuff for iPod and Mac users.

The premium version of the RealPlayer now has the ability to transfer saved clips to video iPods in h.264 format.

"We magically do the video conversion to the right video format and then put them on iPod,'' Real VP Jeff Chasen said.

You transfer the clips as files. Real's still working on a way to have the player's library mesh with iTunes so they automatically sync; Chasen said that should come next year.

Also new today is a beta version of the new player for Macs. It's free, and a final version should be ready in the first half of next year, Chasen said.

Real didn't provide many user stats. Chasen would say only that "millions and millions" tried the beta version and Real's now seeing about a million downloads a day.

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November 15, 2007 12:00 AM

RealPlayer 11 goes gold today, Mac beta debuts

Posted by Brier Dudley

A complete version of RealNetworks new flagship media player is available today, five months after the company released a beta test version to the public.

Its standout feature is the ability to "rip" videos from the Web with a click and save them for later viewing. When you have the player running and you browse over an online video clip that doesn't have copyright locks, a control appears and asks if you'd like to save the video to the player.

The basic player is free while a premium version with additional features, such as DVD burning of saved videos, costs $40.

New in the final version is the ability to view thumbnail images of saved videos.

Real is also announcing new stuff for iPod and Mac users.

The premium version of the RealPlayer now has the ability to transfer saved clips to video iPods in h.264 format.

"We magically do the video conversion to the right video format and then put them on iPod,'' Real VP Jeff Chasen said.

You transfer the clips as files. Real's still working on a way to have the player's library mesh with iTunes so they automatically sync; Chasen said that should come next year.

Also new today is a beta version of the new player for Macs. It's free, and a final version should be ready in the first half of next year, Chasen said.

Real didn't provide many user stats. Chasen would say only that "millions and millions" tried the beta version and Real's now seeing about a million downloads a day.

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August 21, 2007 9:31 AM

MTV dumps Microsoft for RealNetworks

Posted by Brier Dudley

MTV's partner on a new digital music venture is indeed a Seattle company, but it's not Microsoft.

The Viacom subsidiary today announced a broad partnership with RealNetworks and Verizon Wireless to provide a digital music service spanning PCs, portable music players and mobile phones.

On Monday, I speculated that the Seattle company MTV might work with would be Microsoft and its Zune group, but I was off by about 14 miles.

I wonder if MTV lost patience with Microsoft after their jointly developed music service, Urge, failed to take significant share from iTunes.

Today's release from MTV calls Urge "critically acclaimed" and says it's a cornerstone of the new venture, but it still doesn't look good for Microsoft. First MSN Music fizzled; now Urge is going to be linked to RealNetworks.

Maybe MTV felt that Microsoft snubbed it and the Urge partnership by launching a separate music store for the Zune.

It's inside baseball, but you've got to wonder about Microsoft's shifting digital music strategies. The company has some of the best technology for digital media, but its music initiatives and partnerships seem to come in fits and starts.

UPDATE: There are some spicy comments posted in response to this entry, but for some reason our system was recently displaying zero comments posted. I've asked for more duct tape to be applied to the jalopy powering our blog system. Meanwhile I hope that zero doesn't dampen the conversation ...
UPDATE2: Fast service with the tape, no more zero.

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May 31, 2007 11:39 AM

New RealPlayer: Click to rip video from the Web

Posted by Brier Dudley

CARLSBAD, Calif. -- The second big Seattle product launch at the D conference was today's unveiling of the new RealPlayer software jukebox, the 11th version so far.

(The first was Microsoft's Surface tabletop computer).

Real highlighted a new feature that lets users download video clips from the Web with a click and save them in a playlist for viewing later. Users can create folders with collections of videos on a particular topic, such as "political speeches" or "best YouTube flatulence ignitions."

When the player is running and you come across an online video -- even ads -- a small button appears above the frame and gives you the option of clicking to start the download.

Downloads aren't particularly fast, but they take place in the background and continue after you've moved on to another site.

The software works with all sorts of video formats, but not if the content has rights-management attached that prevents copying.

I was given a demonstration Wednesday by Harold Zeitz, Real's senior vice president of games and media software and services.

"The real innovation here is the universality of it and the fact that is enabled in such a simple way,'' he said. "We call it the one-click download.''

From the player, users can also send friends links to the content and burn copies of the videos onto CDs or DVDs that can be played in a DVD player.

Real has also simplified the installation process so people only have to go through three screens to set up the player.

A beta version of the software will be available for Windows users to download for free by the end of June. A Mac version is due by the end of the year.

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March 20, 2007 4:26 PM

Movaya launches PlugNPlay game store plugin

Posted by Brier Dudley

Seattle startup Movaya has launched an intriguing new service: a turnkey mobile games store that retailers, bloggers, MySpacers and anyone else can add to their Web sites.

The service includes the ability to cut and paste a snippet of code onto a Web site to begin selling mobile games.

From the release:

"Until now, selling mobile games directly to consumers via a Web site was difficult and expensive" says Movaya CEO Phil Yerkes. "PlugNPlay eliminates the need for any online retailer to spend thousands of dollars and months of time to build this type of Web site offering. Our PlugNPlay service it is a quick, easy and low cost solution for anyone wanting to sell mobile video games."

Maybe I should start hawking games here to boost the rainy day fund.

Yerkes previously spent 10 years at RealNetworks in business development and sales management. Before he left he was handling major accounts with wireless companies, including Sprint and Cingular Wireless.

He started Movaya with John Calian, a veteran of domain name service provider eNom.

They surfaced last year and now have a development center in Chengdu, China, in addition to HQ in the Eastlake neighborhood.

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January 18, 2007 11:42 AM

RealNetworks replays

Posted by Brier Dudley, the new entertainment news portal/blog/Rhapsody promotional vehicle that RealNetworks announced today, has a connection to The Seattle Times. was originally started as a film commentary site by Lucy Mohl in 1994, back when Seattle was at the cutting edge of online video services.

Lucy later worked at Real, and is now part of the team here that produces (which has its own entertainment site with local listings and reviews, by the way).

Real acquired Lucy's services and the domain as a package deal, so she didn't get a piece of the Microsoft antitrust coin that Real's been spending lately.

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November 10, 2006 10:14 AM

Ontela gets funding

Posted by Brier Dudley

Fierce Wireless today reported that Ontela received $4.5 million from Hunt Ventures, Oak Investment Partners and Voyager Capital.

Ontela, a Pioneer Square startup led by former RealNetworks veteran Dan Shapiro, is developing technology for sharing photos taken with camera phones.

Its "PicDeck" service can automatically transfer photos from phones to a PC or to online photo services. One of its big selling points is that it installs on a phone in less than a minute.

The funding "will support the company's efforts as it moves from closed service trials to market deployment of its PicDeck mobile imaging platform in 2007,'' the announcement said.

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November 6, 2006 9:57 AM

Salmi, MTV and YouTube keeping it real

Posted by Brier Dudley

When I finally caught up with Mika Salmi last week, he shared a great anecdote about an encounter with YouTube boss Chad Hurley.

I typed it up as a blog entry but just before pushing the "post" button, I decided instead to use it in today's column looking at the evolution of online video.

Maybe I'm too old school. I could have posted the anecdote, then used it again as a column. But that doesn't feel right, especially since the column has a lot more readers than the blog.

On the other hand, the blog always needs fresh, strong material. What goes where and when is an ongoing question as we explore different ways to provide both online and offline news. It's a little inside baseball, but I'd love to hear feedback and suggestions about the approaches I'm taking here.

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November 2, 2006 10:26 AM

RealNetworks Rhapsody phones on the way

Posted by Brier Dudley

RealNetworks will continue extending its Rhapsody subscription music service to new devices, including two categories of mobile phones over the next 12 to 18 months, Senior Vice President Dan Sheeran said today.

"You'll see mobile phones come to market that fit both those categories,'' Sheeran said during a presentation at the Northwest Entrepreneur Network's "Entrepreneur University" event at the Seattle Sheraton.

Rhapsody will go onto phones that can stream music stored on the network -- what Sheeran chacterized as the "celestial jukebox." The music platform will also be used on phones that can both stream network music and play music stored locally on the devices.

The phones with local storage are likely to use flash memory such as the Micro SD cards produced by SanDisk, one of Real's key partners as it moves its technology onto devices. SanDisk also manufactures flash-based MP3 players, including the first Rhapsody branded device introduced a month ago.

In his presentation on the role of platforms in business, Sheeran described how Real weighed different approaches for its new platform approach. It considered the closed-platform approach that Apple's using with its iPod and iTunes and the more open approach Microsoft tried with its "Plays for Sure" digital music platform over the past four years.

Real tried to use Plays for Sure but the platform had technical problems with interoperability and limited how much Real could develop unique products, he said.

"What we found was when we were dealing with somebody else's technology platform we were limited by innovation we were able to do,'' he said.

"Even if it worked at an interoperability level it was going to lead to a lot of services and devices that all looked the same."

That situation benefited the platform provider more than companies selling services based on that platform, he said.

Real realized several years ago that Plays for Sure wouldn't prevail and Microsoft would go a different direction, which it's now doing with the Zune product and its Apple-like closed platform.

"We knew that regardless of what they did we were going to have to get onto our own platform,'' he said. "We thought it was only a matter of time before they made the shift they did."

So Real developed what Sheeran characterized as a "hybrid" approach for its Rhapsody platform, similar to those used by TiVo and XM radio. Real maintains controls on copy protection and file transfer technology and specifies technology on the consumer interface such as the music guide.

"The goal is to define enough of the touchpoints between the different parts of the customer experience that we could really deliver on a brand promise if we put the Rhapsody logo on a device,'' he said.

Microsoft's mixed messages with Zune and Plays for Sure gave Real an opening to work with Best Buy, which is now the major outlet for SanDisk Rhapsody MP3 players, Sheeran said.

"Zune tells them that Microsoft doesn't believe in its own Plays for Sure market,'' he said.

As for competition going forward, Sheeran said Real faces "strong competition" from Apple and Microsoft.

"There will be more than one winner,'' he said.

UPDATE: A little context, now that I'm back in the office. Perhaps Sheeran was expanding on what to expect from Real's September acquisition of WiderThan, a South Korean mobile music company. Here's Tricia's write-up of that deal.

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October 25, 2006 1:54 PM

Did DVD Jon crack the iPod, or add another lock?

Posted by Brier Dudley

Jon Johansen's getting headlines again today for supposedly breaking the iPod's content protection technology, similar to the way he broke DVD copy protection in 1999.

A reader from Mukilteo e-mailed me to share his thoughts on Jon's ethics:

"Doesn't it seem ironic that a hacker is now trying to make money from something he has hacked. Will he be upset the same as the companies he has hacked, when someone hacks his ideas?"

A good point, and I'm sure lots of people are waiting for that moment to come.

But I wonder if Johansen's latest venture has been mischaracterized as a hack. That's a sexy story -- that a famous hacker broke open the iPod -- but it sounds to me like he's really developed a different form of content protection that will be palatable to everyone but Apple. That's a long way from cracking the DVD copy-protection scheme, and it doesn't sound like he's breaking any locks other than the Apple lock-in.

This interview with Johansen's business partner makes it sound like the new technology mimics Apple's FairPlay content protection. It can be applied to other content, a move that can fool iPods into "thinking" they're playing FairPlay content.

The technology can also be used to play FairPlay content on non-Apple hardware, apparently by fooling the content into "thinking" it's on an iPod. But it doesn't allow unlimited copying.

It sounds awfully similar to the FairPlay workaround that RealNetworks developed two years ago in its Harmony software. It allowed content purchased from Real to be played on the iPod, and Apple had a hissy fit.

Jon's saying he's got already got a buyer of his technology. Record labels would be interested in alternative ways to sell protected content to iPod owners.

What would be really interesting is if a company like Microsoft endorsed or even licensed his technology, giving them an indirect way to bypass Apple's restrictions. If it really does pass legal muster, Microsoft could even suggest using Johansen's technology to play iTunes content on the Zune.

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Gadgets and games | Fun stuff I've written about lately includes Apple's iPhone, Hewlett-Packard's HDX laptop and Microsoft's Halo3. Also on the radar are new digital video boxes such as the Tivo HD and the Vudu.