This is going to make some shockwaves this week. Apple shot them down not to long ago, now they are working on the iPod regardless.
Personally I hope Apple embraces it. I think it would remove a major barrier some potential iPod customers face. If Apple locked in a deal with Real, it could become the premier hardware provider for two popular music services. Customers of either provider will still want an iPod.
Together, they are stronger than separate against Microsoft.
Just like Mozilla is a lot stronger with Safari, and Opera working together, than separate.