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Sale Helps Real Hit High Note

Offering 49-cent music downloads for three weeks helps its online store rise to No. 2.

September 09, 2004|Jon Healey | Times Staff Writer

After selling downloadable songs at half-price for three weeks, RealNetworks Inc. has climbed the ladder of online music stores -- all the way to ... No. 2.

Real sold about 3 million tracks during the promotion, which cost the company about $2 million, said Sean Ryan, vice president of music services. That's less than one-third as many downloadable songs as market leader Apple Computer Inc. typically sells in a three-week period.

Nevertheless, Ryan said the 49-cent downloads accomplished their goal of pushing Seattle-based Real, which launched its download store this year, past more established competitors such as Roxio Corp.'s Napster and MusicMatch Inc.

"We are a strong No. 2, and we have taken market share from Apple," he said.

Apple spokeswoman Natalie Kerris contested that, saying: "During the last three weeks, we did not see any drop in our market share, and our sales grew each week."

Real's sales figures put it closer to other also-rans than to Cupertino, Calif.-based Apple, which sells well more than half of all music downloads. Even Apple's sales rate, at about 4 million a week, pales in comparison to the volume of music downloaded free -- and illegally -- from online file-sharing networks.

Analysts weren't exactly blown away by Real's proclaimed ranking, which was based on estimates, not published statistics.

"If you've got staying power and you can be profitable at it, then it's not so bad, if the market continues to grow and grow fast," said analyst Michael McGuire of GartnerG2. "Otherwise, I'm not sure what you're getting."

Ryan said the company would focus on having the most popular subscription-music services and the No. 2 download store. It plans to continue offering 10 half-priced songs every week and letting customers transfer songs to almost every leading portable music player, including Apple's iPod.

"They really came from way back in the pack," said analyst Phil Leigh of Inside Digital Media. Although Real's sales will drop, he said, "I wouldn't be at all surprised to see them stay several times higher than they were before."

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