If you go by the headlines alone, it sounds like RealNetworks (Nasdaq: RNWK ) is about to embark on a heady money-losing venture as it halves prices for its music download service Harmony, looking to take a bite out of Apple (Nasdaq: AAPL ) . Well, don't get me wrong, it is, but it's not quite what it sounds, and I'm not sure it's cause for much alarm at all.
RealNetworks announced its Freedom of Choice campaign today, which is a fire sale of sorts, offering song downloads for $0.49 each and albums for $4.99 each. Compared with the pricing for the industry standard -- Apple, iPod, and iTunes services, which recently delivered its 100 millionth download -- Real's offering the equivalent of a two-for-one sale.
Though RealNetworks now expects its upcoming quarterly loss will be wider by a penny related to the campaign, these prices aren't going to be an ongoing business initiative. So, while it's an interesting move, rumors of an all-out price war may be greatly exaggerated.
It's another day that brings to mind that desperate times call for desperate measures, and we've seen some pretty wild attempts in recent history, from rivals such as Roxio (Nasdaq: ROXI ) and Dell Computer (Nasdaq: DELL ) .
Real's been rabid to rip market share from Apple. Although Real may have gotten some sympathy several years ago for having called out Microsoft (Nasdaq: MSFT ) for anticompetitive concerns, it seems a little harder to sympathize with it lately.
Apple may have garnered 70% of the download market and then rebuffed Real's overtures to play beautiful music together, but that didn't give Real any good reason to -- in Apple's words -- "hack" into the iPod. This seems one in the latest pot shot at Apple, which consumers have chosen over the competition, which also includes Sony (NYSE: SNE ) and even Wal-Mart (NYSE: WMT ) . At this rate, Real may start to get "real annoying."
What Real seems to forget is that Apple's products are so darn popular, and current pricing may not be that much of a concern for the downloading public (downloaded albums are still a lot cheaper than CDs, and for some, downloading single songs certainly saves money compared with entire unwanted albums).
So, this campaign may paint Real as a bit of a rebel without a cause. Though yes, it might result in a flurry of Harmony downloads in the near term, the sheer fact that Harmony does work with a variety of players doesn't require loyalty. I'm not convinced Real's plan will further its long-term agenda much -- or take a very big slice of the Apple pie.
Read more on Apple, Real, and music downloads:
- RealNetworks' Sour Apple Note, by Tim Goh
- Apple: 100 Million Served, by Tim Beyers
- Apple Won't Get Real, by Seth Jayson
Fools are discussing this latest attempt by RealNetworks to swipe iTunes market share on the Apple discussion board.
Alyce Lomaxdoes not own shares of any of the companies mentioned.