Glaser worked for Microsoft from 1983 to 1993, so it should come as no surprise to discover that he and his company have an affinity for good old-fashioned closed standards. "Rob grew up in the Microsoft world, so he understood the role of proprietary software in maintaining an advantage," says David Yoffie, a professor at Harvard Business School and co-author of "Competing on Internet Time: Lessons From Netscape and Its Battle with Microsoft." "He knew that having some proprietary standard would help him in the long run."

From the start, Glaser recognized that creating the best streaming-media software would not be enough. "He also had to control it," Yoffie says -- which is why in November 1994, a year before RealPlayer debuted, Glaser filed a patent application for "audio on demand."

The patent, awarded in 1998, has yet to be the basis for any RealNetworks-initiated lawsuits, but it lays out the basic system of streaming: encoding and compressing multimedia, and sending the file through the Net to a user's computer, which receives, decompresses and plays the file in real time. It also points to the future of streaming: balancing loads to minimize congestion and combining images, tables of contents and other pieces of data into a single stream.

But while it makes the process of streaming public, the patent does not reveal the protocol; the actual code remains under wraps. "We've created a closed loop," says Len Jordan, RealNetworks' senior vice president in charge of consumer appliances. "Only our players play our content."

On the Net, where so much current media and programmer attention focuses on the battle between closed and open, between Windows and Linux, between the recording industry and Napster, the idea that a company could go head-to-head against Microsoft with its own closed content seems, in 2001, almost revolutionary.

But soon after RealNetworks started to grow, executives realized that their closed loop brought with it a huge advantage. It achieved one of the golden goals of commercial software marketing -- it made it hard to switch to a competitor. Abandoning Netscape was easy. Users lost nothing; Web pages rarely rendered differently. Many people never even knew what made Netscape's Navigator browser different from Microsoft's Internet Explorer.

But those who are tempted to use Microsoft's streaming format have a tough decision to make. They have to weigh the fact that all the Web's earliest streams are archived in RealPlayer format. They must also consider that 60 percent of the Web's presently available streams flow only through RealNetworks, according to DFC Intelligence, a webcast tracking firm. In contrast to the case with browsers, "there are real switching costs," says Harvard's Yoffie. "Even if all new content goes into Microsoft-protected formats, there will still be a lot of historical content that can only run on RealPlayer. Content providers and consumers have an incentive to stick with Real, regardless of price."

Most of the streaming-media users who use both formats prefer to stay agnostic; iBeam, Launch.com, SonicNet, Yahoo Broadcast and half a dozen other companies either refused to comment for this article or failed to return multiple phone calls. And those who have used RealNetworks exclusively for years exhibit a strong sense of inertia. An NBA.com spokesman, for example, says he hasn't bothered with Microsoft because of RealNetworks' "positive track record" and "established name." Others stressed that switching doesn't seem necessary. "It's not a question of why," says Renata Luczak, a spokeswoman for Comedy Central, which streams its television shows only in RealNetworks' format. "When we first started streaming [in 1997], we worked with RealPlayer and we still do because we're happy with them. If there's enough of a demand for Windows Media Player, maybe we'd consider switching. But for now, we're comfortable."

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