RealNetworks, Inc. (NASDAQ:RNWK) should have saw this coming when they release their new controversial RealDVD software.  While RealPlayer already allows you to download any video from YouTube or powered by Flash, RealDVD allows you to rip DVDs and make back up copies.  RealDVD was officially launched today.  Six major studios announced that they are suing the software company over the software.

These studios believe that many of Netflix and Blockbuster’s customers would just burn the movies that they rent with the RealDVD software, thus causing them to lose out on a great deal of money.  The lawsuit was filed at the U.S. District Court in L.A. 

“The incentive for the consumer is obvious and all but overwhelming,” stated a request by the movie studios.  The request was for a temporary restraining order. “‘Why,’ he or she may ask, ’should I pay $18.50 to purchase a DVD when I can rent it for $3.25 and make a permanent copy?’”

RealNetworks defends their software by saying it is legal.  RealDVD is sold for $30 per consumer at $20 for up to four licenses after that.  The software copy is locked into the original owner’s hard drive and does not alter the encryption technology used by movie studios already.  Copying one’s own personal copies of a DVD is “fair use” by law. 

The movie studios stated that RealDVD violates the Digital Millenium Copyright Act to bypass technologies that prevent the copying of a DVD without permission of the copyright owners.  The movie studios that are suing RealNetworks includes Viacom, Inc. (NYSE:VIA)’s Paramount Pictures, Sony Corporation (NYSE:SNE)’s Sony Pictures, News Corporation (NYSE:NWS.A)’s 20th Century Fox, General Electric (NYSE:GE)’s Universal, The Walt Disney Company (NYSE:DIS) studio, and Time Warner Inc. (NYSE:TWX) Warner Bros.

Yahoo! Inc. (NASDAQ:YHOO) has started making use of their partnership with RealNetworks, Inc. (NASDAQ:RNWK).  Yahoo! has embedded the RealNetworks Rhapsody player in their search results when finding artists.  The feature started today and even utilizes Yahoo!’s acquisition of FoxyTunes.  The song loads into FoxyTunes powered by Rhapsody.  Users can only play 25 songs per month, but can pay to get unlimited music plays.    Over 5 million tracks are supported so far.  Rhapsody Unlimited is $12.99/mo.

Below is a screenshot example of when I searched for Bob Marley on Yahoo! Search:

This new feature automatically will have to make Google and Microsoft step it up in terms of integrating audio with search.  Google recently started Google Audio Indexing.  But MSN Music could use some work in terms of integration into Live Search. 

What we are seeing here are competitors joining hand-in-hand now.  Yahoo! Music was at one point directly competing with Rhapsody.  Now the services are best friends.  Google and Yahoo! compete for search, but now Google will be powering almost all of Yahoo!’s ads.  On the Yahoo! homepage, you can log into multiple e-mail accounts.  Whatever happened to the Internet being a melting pot? 

RealNetworks, Inc. (NASDAQ:RNWK) is opening up a new feature for Rhapsody, their iTunes competitor.  Prior to launching this feature, Rhapsody offered subscribers streaming copy-protected audio for a monthly fee and the file format was incompatible with iPods and iPhones.  But now Rhapsody will be selling DRM-free MP3s a la carte and they will be compatible with the iPod and iPhone manufactured by Apple Inc. (NASDAQ:AAPL).

Customers will be able to access 30 second samples of each track.  Most of the tracks will be around $0.99 per song and $9.99 per album.  Rhapsody currently has about 5 million songs provided by Universal Music, Sony BMG, EMI, and Warner Music.

To appease the demands of music labels, Real will provide “a strong emphasis on the digital album with merchandising centers for ‘new album releases,’ ‘old favorites,’ and ‘who’s on tour.’”  Labels prefer to sell full albums rather than individual songs.

As part of the launch, Real offered the first 100,000 users to sign up for the MP3 store a free album.  Real commands about 1% of the online music download market.

[Source: AppleInsider]

[Image credit: Radio And Internet Newsletter: www.kurthanson.com/dos]

Internet radio listeners, forget about the Apple iPhone releasing on June 29th for one minute and realize the consequences of what will happen on July 15th, 2007.  Royalty rates for Internet radio will be increasing at an alarming rate and was set by the Copyright Royalty Board in Washington D.C.  Two days ago, about 21 Internet radio websites shut down their service to make a statement.  It was officially the Internet Radio Day of Silence on June 25th.  I was not aware that this was going on until I read a blog post on Yahoo’s blog, Yodel Anecdotal^[1].

“The new royalty rates are higher than the revenues anyone can hope to make from related advertising. In other words, we all lose money on Internet radio starting July 15th. Yahoo! has no intention of operating LAUNCHcast radio as a loss-leader,” wrote Ian C. Rogers of Yahoo! Music.  Rogers began working for Yahoo! Music three and a half years ago after Yahoo! acquired Mediacode.  Rogers wrote a brief history of the situation with the Copyright Royalty Board on the Yahoo! Music Blog.^[2]

If the bill passes, Internet radio companies will start losing money.  Less than 3% of Yahoo! Music subscribers pay for music and the money made from ads is not sufficient enough for the hike in royalty fees.  So if Yahoo! Music keeps losing money along with the other Internet radio companies, keeping them afloat won’t be easy.  Many companies cannot afford the royalty rates and may even shut down.

Royalties will increase between 300 and 1200 percent.  Internet radio currently pays double of what satellite radio pays and Internet radio listeners jumped from 45 million listeners per month to 72 million listerners since last year.  Yahoo! Music has been providing value to Internet radio listeners for years and for free.  I don’t want to see the service taken away as it is one of my favorite products made by Yahoo!

For more information, visit http://www.savenetradio.org.

[1] Yodel Anecdotal: Yahoo! Music goes radio silent
[2] Yahoo! Music Blog: Yahoo! Music Goes Radio Silent

RealNetworks, Inc. (Nasdaq: RNWK) has unveiled Film.com at the annual Sundance Film Festival in Park City, Utah.  The new Film.com features movie trailers, DVD releases, celebrity gossip/news, and other television programming features.  RealNetworks is also featuring exclusive video footage of Sundance on Film.com.

The original Film.com was created in 1994 by Lucy Mohl, an independent film critic based in Seattle. The new Film.com has contributors from all over the U.S. to give a more opinionated feel to the website.  An example of one of the writers includes Mary Ann Johanson, a New York-based 10 year veteran of film column publishing.

“We have created the site to be a single, multi-faceted location for all things relating to movies, celebrities and television shows, covering both mainstream popular interests as well as independent and indie films,” stated Elizabeth Coppinger, a VP of Media Software & Services for RealNetworks. “We look forward to providing our site visitors with a fresh and unique approach to movies, television, and entertainment.”

Besides covering the festival, Film.com is also hosting a launch party in Park City as well.  The party footage will be added on Film.com later.

Yesterday, AOL had agreed to sell AOL Music Now to Napster for $15 million.  Napster would absorb AOL Music Now’s 350,000 subscriber client base.  After that, Napster would have 916,000 subscribers.  Before the transaction, Napster was worth about $186 million, but now with the value-added 350,000 subscribers, the valuation is expected to jump by another $100 million.

“AOL is treating this like a nonessential business,” stated Fred Moran, a Stanford Group analyst.  After the announcement was made, Napster, Inc. (NASDAQ: NAPS) shares rose by 30 cents, making Napster $4.12 per share.  AOL will continue to maintain AOL Music.

It was in October 2005 when AOL had bought Music Now for a suspected amount of $10-15 million from Circuit City.  Now AOL’s music services are owned by RealNetworks.  RealNetworks is known for streaming subscription music player, Rhapsody and WinAmp competitor, RealPlayer.

Napster will also be promoted on AOL Music pages and if certain subscription targets are made by Napster, AOL would receive additional payments.