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IBM, RealNetworks in pact
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April 12, 1999: 7:57 a.m. ET
Computer giant enlists streaming leader to set standard for audio downloads
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NEW YORK (CNNfn) - The race to market music over the Internet intensified Monday as a result of IBM Corp.'s announced partnership with RealNetworks, an online broadcaster of audio and video.
Under terms of the deal, IBM will integrate RealNetworks technology into a security system that ensures music downloaded from the Internet against piracy. By sharing the startup's software technology -- and its 55 million listeners -- IBM hopes to capture a piece of a market eyed by other big technology companies.
Microsoft is expected to announce its own music downloading format this week. And last week, Universal Music and BMG, the nation's two largest music companies revealed a joint venture to sell their products over the Internet.
In an interview with CNNfn's Business Day, Richard K. Selvage, general manager of IBM (IBM)'s Global Media and Entertainment Industry, said Monday's deal involves sharing technology as opposed to taking a stake in the Seattle-based startup.
"It's going to be good for IBM, it's going to be good for consumers, it's going to be good for the music industry," Selvage said.
Many major recording labels are concerned with the ease of downloading online music. Selvage stressed that after working with the five major music labels to develop IBM's Electronic Music Management System, those fears were addressed.
"The electronic property owners (and) the artists will be paid for it," Selvage said.
"It takes the legality out of the issue for them," said Andrew Barrett, technology strategist for Salomon Smith Barney. "I think it's a great move for IBM."
A trial of the music exchange with RealNetworks (RNWK), to be delivered over broadband cable lines and telephone lines, will begin this spring.
IBM shares closed Friday at 186-5/16, down 11/16. Real Networks closed at 207-1/2, down 6-1/4. 
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