The New York Times reports that Real has reverse-engineered Apple's proprietary FairPlay DRM so that music in Real's proprietary DRM format can be converted to FairPlay and played on the iPod (RealNetworks Plans to Sell Songs to Be Played on iPods). Strangely, there is no mention of Hymn (Hear Your Music aNywhere), which has also reverse-engineered FairPlay. I wonder if any Real engineers looked there for some hints (well, actually the whole thing), given that they wouldn't want to violate any of Apple's click-wrap contracts. Hmmmm. For more information, Frank Field has a good roundup of press coverage and the press release on Furdlog (Mousetrapped?).
Of course, the NY Times gets the reporting wrong. "This will be the first time any company other than Apple has sold songs for the iPod." Ummm, no. Any company that sells songs in the non-DRM'd encumbered MP3 format is selling songs for the iPod, given that the iPod supports MP3 playback. Check out Magnatune for example.
One question, of course, is whether Real's efforts here violate the DMCA, which prohibits the distribution of anti-circumvention devices. Such an analysis is very fact-dependent, and there isn't enough known about Real's program to say for sure, but I suspect that it doesn't. Real's software is apparently converting songs from one format into the FairPlay DRM'd format. This would not seem, without more information, to be an anti-circumvention function.
Note, however, what Real is not doing (and strangely, the news reports don't seem to mention either). You can convert Real files into FairPlay files, but you can't convert FairPlay files into Real files. Real is not allowing people to copy their iTunes into Real's DRM'd format. Why? Because it would likely be a clear violation of the DMCA. You may be able to play Real's DRM'd music on an iPod, but you still won't be able to play iTunes on a portable music player other than an iPod.
So, this isn't quite the breakthrough the analysts and whatnot seem to be claiming. If you buy anything from iTunes, you're still locked into Apple. If you buy an iPod, you can buy from Real's music store, but what real advantage does that provide? A DRM connoisseur might say that you will have the option of using other players in the future, but so what? Anyone who knows anything about DRM knows that you can't trust any of these competing formats. Perhaps in a few years one might want to buy another brand of portable music player, but what happens if Real's DRM fails in the marketplace and is squeezed out? What good did the flexibility do?
If people really care about DRM and its potential costs in the future, then they probably are avoiding DRM all together and sticking with non-DRM formats such as MP3 or Ogg Vorbis. Let me know when there is some important news here, such as Apple licensing FairPlay for use on other players.