RealNetworks Kicks Off 'Freedom of Choice' Campaign With Biggest Music Sale in History

For a Limited Time, Song Downloads Now Cost Just 49 Cents, Half the Price of

Other Stores Including Apple's

Free RealPlayer With Harmony Technology Now Available

Aug 17, 2004, 01:00 ET

    SEATTLE, Aug. 17 /PRNewswire-FirstCall/ -- RealNetworks(R), Inc.
 (Nasdaq:   RNWK), the leading creator of digital media services and software,
 today announced the biggest music sale in history to kick off the Freedom of
 Choice campaign.  For a limited time only, every song in the RealPlayer(R)
 Music Store -- from a-ha to ZZ Top -- costs just 49 cents, with most albums
 available for just $4.99.  Consumers can take advantage of this offer by going
     This limited time sale celebrates the Freedom of Choice made possible by
 the release of the free RealPlayer 10.5, the first product that integrates
 Real's revolutionary new Harmony(TM) Technology.  RealPlayer with Harmony
 enables consumers to buy and download music that plays on more than
 100 portable devices, including the Apple iPod.  Before RealPlayer with
 Harmony, consumers buying digital music were forced to buy music that only
 worked on a particular brand of portable device, meaning that they could
 easily get "locked in" to that device, often without even knowing it.
     "To celebrate Freedom of Choice, we're running the biggest music sale in
 history," said Rob Glaser, founder and CEO of RealNetworks.  "Thanks to
 RealPlayer with Harmony Technology, consumers can now buy digital songs and
 play them on virtually any device of their choice, just like how CDs and DVDs
 work.  We believe Freedom of Choice is both the right thing for consumers and
 a crucial step in bringing digital delivery of music into the mainstream."
     "Freedom of Choice Campaign"
     In addition to the Freedom of Choice music sale, RealNetworks is rolling
 out an extensive print, radio, and online advertising campaign.  National
 advertising includes a full-page ad in The New York Times heralding the
 49-cent download and welcoming consumers to a new era of freedom of choice in
 digital music.  Similar ads will appear in alternative weeklies across the
 country and across the Internet.
     Additionally, RealNetworks is launching a new web-based community at  This community site will provide a forum where
 consumers can learn about compatibility issues and discuss the issues with
 other digital music fans.
     Already the Freedom of Choice campaign has a strong base of support.
 Public Knowledge, a Washington, D.C.-based public advocacy organization that
 seeks to act as the public's voice in the digital age, has endorsed the
 campaign and urged consumers to take note of the issues raised.  The
 organization issued its own news release today in Washington DC.
     "RealNetworks should be commended for increasing consumer choice in the
 online music world," said Gigi B. Sohn, president and co-founder of Public
 Knowledge.  "Public Knowledge has long supported interoperability and freedom
 of choice in digital media.  The more digital music formats are compatible,
 the more choice there is for everyone.  Consumers, the recording industry and
 the technology industry all benefit when there is more choice in the
 marketplace," Sohn said.  "The more choices there are for legal downloading,
 the less incentive there is for illegal downloading.  All companies in the
 technology and recording industries should take the hint and work together to
 bring the benefits of digital music to consumers," she added.
     The members of the musical group Devo, early music video pioneers who had
 a well-known album and song called "Freedom of Choice" in the early 1980s,
 have partnered with RealNetworks to help get the word out about the importance
 of freedom of music choice for consumers.
     "History has shown consumers don't like proprietary systems," said Gerald
 V. Casale, of Devo.  "Consumers and musicians will both benefit from a digital
 music environment that gives the consumers the ultimate freedom to choose
 where they buy music regardless of the kind of device they want to play in
     RealNetworks announced on July 26th the beta test of the new Harmony
 Technology, the world's first DRM translation system to enable consumers to
 securely transfer purchased music to every popular secure music device.
 Harmony Technology frees consumers from the limitation of being locked into a
 specific portable device when they buy digital music.  Now consumers can build
 their library of downloads secure in the knowledge that it will play on
 virtually any device they choose.
     Available as part of RealPlayer(R), the first consumer product to use
 Harmony Technology, consumers can get Harmony at
     With Harmony Technology, RealPlayer Music Store supports more than
 100 secure portable media devices, including all 4 generations of the iPod and
 iPod mini, and products from Creative Labs, Rio, RCA, palmOne, iRiver, Dell,
 Gateway, and Samsung.  Generally speaking, Harmony supports any device that
 uses the Apple FairPlay DRM, The Microsoft Windows Media Audio DRM, or the
 RealNetworks Helix(TM) DRM, giving RealPlayer Music Store support for more
 secure devices than any other music store on the Internet.  Harmony Technology
 will be available later this year in other music products from RealNetworks
 including Real's market-leading Rhapsody(R) subscription service.
     Financial Guidance
     The company previously issued third quarter 2004 financial guidance
 estimating a GAAP net loss between ($0.03) and ($0.04) per share.  The company
 estimates the Freedom of Choice campaign may negatively impact projected third
 quarter net earnings by up to ($0.01) per share.  As a result, today the
 company is issuing a revised estimate for third quarter 2004 GAAP net loss of
 between ($0.03) and ($0.05) per share.  Excluding antitrust expenses, the
 company estimates a net loss of between ($0.01) and ($0.03) per share for the
 third quarter of 2004.  The company remains committed to achieving quarterly
 profitability, excluding antitrust litigation expenses, by the end of 2004.
     About RealNetworks
     RealNetworks, Inc. is the leading creator of digital media services and
 software including the award-winning Rhapsody Internet jukebox service and
 RealPlayer 10, the first product to integrate finding, organizing, buying,
 playing and managing digital audio and video in a single product.  Consumers
 can access and experience audio/video programming and download RealNetworks'
 consumer software at  Broadcasters, network operators,
 media companies and enterprises use RealNetworks' products and services to
 create and deliver digital media to PCs, mobile phones and consumer
 electronics devices. RealNetworks' corporate information is located at
     This press release contains forward-looking statements that involve risks
 and uncertainties, including statements relating to:  (a) earnings per share
 and net loss projections for the third quarter of 2004; (b) cost projections
 for this promotion; (c) projections of quarterly profitability by the end of
 2004; (d) the future release of Harmony technology with other RealNetworks
 products, including Rhapsody subscription services; and (e) the on-going
 Freedom of Choice advertising campaign.  Actual results may differ materially
 from the results predicted.  Factors that could cause actual results to differ
 from the results predicted include:  development and consumer acceptance of
 legal online music distribution services; the success of the Freedom of Choice
 campaign; risks associated with the sustained adoption and use of
 RealNetworks' services by customers, including the uncertainty of whether
 consumers will continue to pay for subscription content over the Internet,
 which is a relatively new and unproven business model; the potential that we
 will be unable to continue to enter into commercially attractive agreements
 with third parties for the provision of compelling content for our
 subscription service offerings; the risk that the costs of our antitrust
 litigation or other litigation will be greater than we anticipate; the
 emergence of new entrants and competition in the market for digital media
 subscription offerings; the impact on our gross margins from content costs and
 from the mix of subscribers to subscription offerings with higher content
 costs than others; competitive risks, including competing technologies,
 products and services, and the competitive activities of our larger
 competitors, some of which have strong ties to streaming media users through
 other products; risks relating to the timely development, production,
 marketing and acceptance of the products, services and technologies
 the Securities and Exchange Commission.