Earlier this week, RealNetworks let it be known that they had figured out Apple's FairPlay DRM well enough to allow tracks from its own music store to be copied to and played on iPods. Today, Apple responded, saying that they are "stunned" by RealNetwork's actions.
We are stunned that RealNetworks has adopted the tactics and ethics of a hacker to break into the iPod(R), and we are investigating the implications of their actions under the DMCA and other laws. We strongly caution Real and their customers that when we update our iPod software from time to time it is highly likely that Real's Harmony technology will cease to work with current and future iPods.
Is Apple overreacting? Waving the DMCA around like a maniac with a sword is not a good start. After all, it is not even clear that RealNetwork's actions fall under the aegis of the DMCA. Of course, that particular law is so poorly written that it is often invoked in cases when it does not apply.
DMCA aside, does Apple need to threaten RealNetworks in order to make its point, or is Harmony a legitimate threat to Apple's business interests? The iPod + iTunes Music Store combination has proven to be a rather deadly one, at least to the competition, and it's questionable whether the existence of Harmony will do anything to change that. iTMS sells over 70% of legal downloads, while the various iPod models account for just over half of all digital music players sold last quarter. While some analysts have suggested that Apple should think about licensing FairPlay, the current closed, tightly-integrated music ecosystem has served Apple's interests very well. Judging by sales, consumers don't seem to be bothered by the closed ecosystem.
Apple's statement may seem petulant, but it was an inevitable shot across the bow that will give RealNetworks serious reservations about advertising any sort of iPod compatibility for RealRhapsody downloads or even licensing Harmony to other music stores. It will likely also give second thoughts to others who might be contemplating a similar move.
Apple could have taken the high road and not responded at all, waited to see if RealNetworks would still be in the music business down the road, or perhaps released a quiet iPod firmware update to thwart Harmony. Instead they chose to cast aspersions on RealNetwork's business ethics. Let's see if RealNetworks chooses to pursue Harmony any further now that Apple has spoken up.
Update: RealNetworks has responded to Apple, saying that they "remain fully committed to Harmony" and providing consumers who own iPods with alternatives. Expect Apple to look for a way to thwart it.
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