Fool.com: Yahoo! Plays, AOL Gets Real [News] July 14, 2000

Yahoo! Plays, AOL Gets Real

The Microsoft-Netscape browser war, rather than having been definitively won or lost, has merely moved to a different battlefield, a different platform. Then, as now, industry standards are the issue. The weapons of choice: distribution alliances, where technology and branded consumer services piggyback each other, as expedience and necessity dictate.

By Nico Detourn
July 14, 2000

Thursday's announcement that RealNetworks' (Nasdaq: RNWK) streaming media technology will be used throughout America Online's (NYSE: AOL) network was another reminder, as if one was needed, of the role multimedia will play as the Internet revs into its next, high-speed growth phase.

Not to overdo it, but the term "multimedia" has overtones of something new and special. On the Internet, though, it typically refers to "old media." For the most part, the multimedia that streams through the Internet to our PCs is the same stuff that beams through the airwaves and careens through the cable lines to our patiently waiting radios and TVs. It only becomes "multi" on the Net, which is what makes it new.

With AOL preparing to absorb Time Warner's (NYSE: TWX) vast portfolio of music, film, and television properties, the integration of RealNetworks' latest RealSystem 8 on its back-end servers, and the distribution of the RealPlayer client to its customers on the front lines, gives the company another set of "soft pipes" for flowing high-bandwidth content to the eyes and ears of the world.

The AOL-RealNetworks announcement was not a terribly surprising one. The two have been partners since 1998 when AOL began distributing the popular RealPlayer client software on its ubiquitous free CDs. This agreement has RealNetworks returning the favor by incorporating into RealPlayer new options that let users signup for AOL.

Such distribution is at the heart of the deal, which is aimed at getting the companies' products into the hands of as many users as quickly as possible. But America Online and RealNetworks aren't the only ones playing that game. Their technology alliance parallels one between Microsoft (Nasdaq: MSFT) and Yahoo! (Nasdaq: YHOO), whose Yahoo! Player was launched in late June.

Same War, New Platform
Yet another standalone multimedia client, Yahoo! Player is based on Microsoft's Windows Media Player, which is bundled with the Windows operating system. This makes Yahoo! Player more than just a competitor with RealPlayer, and with AOL's and Real's just-announced AOL 6.0 media player, for the consumer's desktop. It also plays a role in the rivalry between Microsoft and RealNetworks over streaming media standards. And standards, even more than specific programs and products, are what these alliances and rivalries are about.

With the square off among these four companies, it's possible to see how the famous Microsoft-Netscape browser war, rather than having been definitively won or lost, has merely moved to a different battlefield, to a different platform. Then as now, industry standards are the issue. The weapons of choice: distribution alliances where technology and branded consumer services piggyback each other, as expedience and necessity dictate: AOL on the Windows desktop; Internet Explorer as AOL's browser; AIM distributed by Netscape; RealPlayer by AOL; Microsoft "inside" Yahoo!'s Player and FinanceVision broadband portal.

The classic, all-purpose browser itself is being eclipsed and is shifting from the center of the surfer's universe. Taking its place in a post-browser era are smaller chips off the block -- media players, instant messengers, and other specialized but also versatile clients that can always summon the old lug when their built-in Web viewers aren't enough.

From this view, perhaps the most intriguing aspect of the expanded America Online-RealNetworks deal is that the next upgrade to AOL will include a "multi-platform media player using RealPlayer streaming media technology," which the two are currently developing. Notably, the companies did not refer to this as a "co-branded" version of RealPlayer, something that might have been expected. This suggests that they're talking about a new beast, something that will include features and technologies from AOL's side of the family.

One interesting possibility would be the combination of RealPlayer's streaming media with AOL Instant Messenger (AIM) or the ICQ messenger. AOL is currently under pressure to open its instant messaging platform to rivals. Adding compelling multimedia features to the instant messaging client might make it easier for AOL to open the underlying messaging service to competitors, while at the same time giving the program itself -- the thing that users actually experience -- at least a temporary competitive advantage on the "streaming" edge of a post-browser era.

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