Real Networks reported their 2nd quarter earnings last night and had some pretty choice words for Microsoft. During the conference call Real CEO Rob Glaser took issue with reports that Microsoft’s Zune player is going to compete directly with Real’s Rhapsody service.

“Apple’s success with the iPod and iTunes has raised a fundamental question — is this going to be an industry based on proprietary vertical platforms, each from a single company, like the video game console business, or is the industry going to be based on interoperable platforms that separate hardware and software, like the PC, CD and DVD players? This issue got even more focus last week when Microsoft in effect announced that it is flipping its strategy from the latter to the former, i.e. from horizontal to vertical. It is one of only three companies in the PC space with end-to-end media distribution technology.”

I understand the issue that Glaser is trying to bring up here, but to hear Real Networks trying to rally people around this cause is laughable. Real’s DRM is some of the worst out there. If you want to take music that you purchase from their service onto your portable devices, you actually have to pay them more money to be able to listen to your own music when and where you want to. Why Microsoft agreed to settle their lawsuit for $761 MILLION dollars is beyond me, but without their payments for the next few quarters, Real would be hemmoraging cash right now.

Throughout the conference call, Glaser keeps trying to spin Microsoft’s Zune as an opportunity and not a competitor, but he is clearly worried about having to fight a new force in media distribution when it comes to Microsoft. During the call, Glaser also boasts that over the last 2 years that they have distributed over 100 million pieces of bloatware to internet users. While this might be attractive from an earnings perspective, it’s strange to see the company begging for the blog community to help them sell their music and then talking about how much crap they make you install at the same time.

“we also launched the distribution of our Rhapsody ActiveX control within MSN Messenger in June. This means that consumers who are using Rhapsody Web Services through MSN Messenger will have a friction-free experience when encountering any Rhapsody-powered music playback, whether on, a blog or site, or on a partner’s site.”

Friction-free, what a freaking joke. I can’t tell you how many times I’ve had to uninstall their software from my computer. Everytime I swear off their Real player, some clip comes along which I need their proprietary software to use. It’s neat that Real wants to put an end to DRM that locks consumers into proprietary systems, but I’d like to see them address their own service before they complain about big bad Microsoft. The biggest joke about it all is that Zune isn’t even going to prevent Real from playing their songs on the device. In their settlement with Microsoft they got a 10 year license to their DRM. Makes me wonder if Glaser is really worried as much about his customers being able to use their music on Zune or if he’s more concerned about protecting the pitiful 1.625 million customers that they’ve convinced to use their Rhapsody service.