America Online (AOL) plans to use RealNetworks' web media software throughout its global ISP network.
The deal will give AOL's 23 million subscribers access to RealNetworks' latest streaming media technology when version 6 of the ISP's web access software ships in the autumn.
It will also enable AOL to offer streaming media technology that is closely tied to its network as it faces increased competition from Microsoft's MSN portal, which features Windows Media Player.
RealNetworks' web media player, RealPlayer, will be distributed as part of AOL's Netscape browser as well as through the Netscape Netcenter portal. RealNetworks will also promote AOL services through Spinner, its free web radio player, as well as bundling software within RealPlayer to make it easier for users to sign up for AOL.
RealNetworks' biggest threat is Microsoft, which recently added some high-profile supporters to its streaming media technology. Last month, Yahoo rolled out its own media player based on Windows Media Player.
Microsoft is expected to ship version 7 of Windows Media Player, which will compete with RealNetworks' month-old RealPlayer version 8, in September.
Aram Sinnreich, an analyst at Jupiter Communications, said: "It's been clear for a long time that AOL and RealNetworks have a common enemy and they now have to circle the wagons."
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