REALNETWORKS, the American digital media group, yesterday declared war on Apple Computer and its popular iTunes internet music store by lowering prices for songs downloaded from its own internet outlet to as little as 49 cents (27p).

The new pricing, which is half that offered by iTunes, is designed to lure owners of Apple’s market-leading iPod music players away from iTunes and across to RealNetwork’s RealPlayer Music Store. Real recently introduced software that allows customers to buy music for their iPods without having to go through Apple.

The latest version of Real’s jukebox software uses technology called Harmony that makes songs purchased from Real’s music store playable on Apple’s iPod music players.

Harmony translates digital rights management (DRM) software used with songs sold by Real to make them compatible with the iPod’s standard. Real said that it created the software by “reverse engineering” Apple’s Fairplay DRM technology, which protects songs from being copied illegally.

Richard Wolpert, chief strategy officer for Real, said: “As of today, we are compatible with all of the iPods and all of the versions of the firmware running on the iPods.”

Music industry experts believe that although the legal internet music market could lift the global recording industry out of a prolonged downturn, the inability to move music across different brands of digital music players because of incompatible DRM technology poses a major threat to the long-term growth of the market.

RealNetworks, based in Seattle, also said it would launch its biggest ad campaign for digital music, with print, radio and online spots. The ads depict an iPod as a padlock with its lock in the open position and the tag line: “Half the price of Apple. Welcome to freedom of choice.”

However, Apple has responded to Real by saying its rival had “adopted the tactics and ethics of a hacker” and said it was “investigating the (legal) implications” of the software. Apple, based in California, leads all other digital music services by far, with more than 100 million downloads sold to date. Apple had earlier rejected RealNetworks’ approaches to license Apple technology to make RealPlayer’s music playable on the iPod.

A spokesman for Real said its new service and marketing campaign were not aimed at Apple, and were intended to widen choice for buyers of online music. He said: “It’s not working against Apple, it’s working for the consumer. Digital music should be a liberating thing, but there are strings attached, and the only people who have a problem with this are Apple.”

Apple is assessing whether RealNetworks has violated US law restricting reverse engineering of digital products.

Apple said in response to Harmony’s release that it may release an update of software that powers iPods that would render Harmony useless.

E-MAIL SNUB SPARKS WAR

HOSTILITIES between two of the leading digital music companies could have been averted if Steve Jobs, who heads Apple Computer, had replied to an e-mail from Rob Glaser, his counterpart at RealNetworks.

Mr Glaser offered in an e-mail sent on April 9 to work with Mr Jobs to forge an alliance against competitors using software created by Microsoft.

“We are seeing very interesting opportunities to switch to Microsoft’s Windows Media Audio format,” Mr Glaser’s e-mail stated. “Instinctively, I don’t want to do it because I think it leads to all kinds of complexities in terms of giving Microsoft too much long-term market momentum.”

But Mr Jobs wasn’t motivated by the call to arms, and the e-mail went unanswered. The snub embarrassed RealNetworks, and relations deteriorated beyond repair, when the e-mail found its way into the hands of the media. RealNetworks has since launched an all-out attack on Apple and its market-leading iTunes music store.

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