RealNetworks company is one of the first challenging players of online broadcast music. Then, they start to utilize new alternative ways to media products like games, videos and etc. Although company is very successful and competitive, sector comes to some natural barriers to overcome. One of these barriers is about mass-market acceptance of online subscription music service.
While this service, named online library management model, has many benefits for both consumers and the music industry, there are several challenges that will need to be overcome to reach mass market success. First, persistent internet access via wireless networks will likely be necessary to offer an optimal user experience. Today’s less than perfect 3G network coverage may be acceptable to early adopters. However, for the mass market, better coverage may be required. A second barrier to adoption will likely be consumer reluctance to surrender their music libraries to third parties for remote storage and management. Many consumers like to own their music, and the idea of Online Library Management may feel like a threat to their ownership. Finally, there is likely to be resistance from established music industry players who are unaccustomed to this new model.
To catch the success in this point, company insist on having good library for customers who wants to storage manage and easy access for his area, good accesibilty and consistency for variety device. In addition they should invest on cable and wireless internet technologies which will be still increasing trend in the next few years. They should try to change minds of customer about having or playing music or video. That kind of marketing provide increase market lines and potential. Ofcourse, out of support from artist and legal authorities, product/ service development cannot be successful alone. They should open new ways and allowance to online subscription technologies. These kind of agreement is useful for all sides of market.
RealNetworks in 2004 saw the threat of barriers for the sector and invest significant budget to overcome it. They tried to increase customer numbers by concentrating on channnels to persuade new ones from another rivals basket or new users. Building a subscription habit was very fit strategy for their situation. In addition, they anaylzed their pricing and promotion strategy to gain users contiunity and sales revenue. Also, they collect some customers through distribution partners or previous software customers. Finally, differentiating their service by investing some good technologies to service multiple format platforms, some tools to communicate customers, recomendation system delivered to customers is critical to be competitive.
However, after 2004 some challenges come to market and breaked the forecasts. The company has been exposed to losses of potential revenue because of the
iPod effect and rising rates of
digital piracy. The recent release of the new
Microsoft operating system,
Windows Vista, is also a major threat to RealNetworks' profitability, as Vista is included with the newest version of RealPlayer's powerful competitor, Windows Media Player. As a horizontally integrated corporation providing only software applications, the company faces heavy competition from vertically integrated companies like
Microsoft and
Apple. So RealNetwork should make niche for itself in the software world and/or they should make some business partnerships with companies in vertical integration steps. This make RealNetwork stronger in his position.
Digital piracy, the illegal downloading of "intellectually copyrighted" material, has the potential to affect music sales. As more people find that they can download the music that they want for free through peer-to-peer networks and off of different websites, they lose the incentive to pay a dollar per song. With digital rights management (coding that prevents piracy but makes music more difficult to move) being heavily protested by the public to the point where many digital distributors are removing it, piracy will continue to rise. Because of this, online subscription companies shoul negotiate with legal aouthorities to protect rights and more serious penalization for that kind of burbery. In addition, to persuade to buy original products online servicer companies use more promotive pricing to maintain crowds in legal ways.
Advertising and other marketing issues is may be good to set good brand image and gain new customers who is new for online media usage. Because the market is very young and just early adopter in the basket now, there is stil wilderness forest to enter.
1-Description of the technology
