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Last Updated: Tuesday, 17 August, 2004, 12:29 GMT 13:29 UK
Real in online music price war
Apple iPod
Like most sellers, Apple locks iTunes music against easy copying
Media software firm RealNetworks has halved the price of its music downloads in an aggressive attempt to boost its share of the online music market.

The company is offering songs for $0.49 each, down from the usual $0.99, while albums are available for just $4.99.

The offer, due to last for a limited but unspecified period, is expressly aimed at undercutting arch-rival Apple.

Advertisements for the campaign feature the slogan: "Half the price of Apple. Welcome to freedom of choice."

Turf war

Apple dominates the market for online music through its iTunes service.

It is an aggressive statement that they want to grow their market share
Rebecca Jennings, Forrester Research
iTunes, in common with most online music sellers in the US, typically sells individual songs for $0.99.

RealNetworks' price promotion coincides with the public launch of the firm's latest RealPlayer jukebox software, which allows users of Apple's popular iPod portable music player to play tracks downloaded from the RealNetworks website.

The software means that iPod users can now potentially buy their music online from RealNetworks, as well as from iTunes.

Last month, Apple said the new RealPlayer software may have breached its intellectual property rights, and accused RealNetworks of adopting "the tactics and ethics of a hacker".

Loss leader

RealNetworks admitted on Tuesday that its price promotion would widen its third quarter losses by one cent per share.

"This will be a short-term event," said Rebecca Jennings, senior analyst at technology research firm Forrester.

"It is an aggressive statement that they want to grow their market share, and encourage people who are currently downloading illegally to start buying online music legitimately."

Industry experts said the company had probably set aside about $2m (1.08m) to pay for the promotion.

Paul Myers, chief executive of UK-based online music store Wippit, said the offer would be popular with consumers.

"The public perception is that online music is too expensive at the moment," he told BBC News Online.

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