By Joel Dreyfuss

(FORTUNE Magazine) – I'm not ready to throw out my boom box, but I'm getting mighty close. With the launch of RealNetworks' RealJukebox, my PC has moved into the ranks of serious music machines.

I don't mean CD players or stereo components are dead. No matter how powerful my PC and how expensive its speakers, my home stereo still sounds better. That's not surprising. The electronic warfare going on inside the average computer produces a lot of beeps and squawks that have to be muted. I'm happy that the quality of music on the PC has simply gotten to the point where it's good enough to be a contender for my ear time.

RealJukebox is software that does, among other things, play music on your PC, producing pretty decent sound. But what has me excited is the fact that this software can do something my CD player can't: organize my music. Because it organizes music from both traditional (CDs) and nontraditional (the Net) sources, RealJukebox puts RealNetworks right in the middle of all the battles between traditional music studios and the world of people who download free--and often pirated--music from the Internet.

The product, announced last week, plays music digitized into the popular MP3 format (as well as into the RealAudio proprietary format). MP3 has become the preferred format for compressing and storing music on the Internet. You can download music (most of it legal) from hundreds of sites and store it on your PC for later playback. A five-minute song takes up about three megabytes of hard-disk space, while 60 minutes of music uses about 45 megabytes at the highest fidelity available in RealJukebox. If you sacrifice some quality, you can cut your storage requirements in half. On today's standard six- to eight-gigabyte hard drive, you could probably find room for a couple of dozen of your favorite CDs along with your business applications.

In some ways, however, the MP3 stuff is just a distraction. The real value of RealJukebox is what happens when you slip a music CD into your PC. The software reads the CD, lists the tracks and the lengths, and will play the music. That's what all music-player software does. But if you're connected to the Net, RealJukebox will also give you the title of the CD, the genre of music, and the names of all the tunes. It accomplishes this little bit of magic by reading a unique ID number on each published CD and tapping an online database called CDDB for the artist and music information. RealJukebox also stores the contents of your CD on your PC's hard drive--it does this in a snap if you have a powerful machine.

This is where the organization part kicks in--at least in theory. RealJukebox indexes each track on your hard drive by album name, artist, genre, and song title. Since most downloaded music also includes title and artist information, you can combine downloaded music and CD tracks, and arrange them in a playlist. Your list of songs is stored in a directory that shows up on your screen as an outline. You can compile different lists, drag titles from one to another, and create a playlist of your favorite tunes--from CDs you own and songs that are on the Net.

After organizing these playlists, it would be nice to be able to print them out. Unfortunately, the beta version of the software I tried has no provision for printing a list of all the music stored on the machine; I'm sure some ambitious young software entrepreneur is already working to correct this oversight. It would also be nice to send my favorite tunes to someone else. But to alleviate the worries of the music industry, RealNetworks has included some security features to prevent you from making mass copies for distribution. Files recorded on one machine can't be played on another PC.

When you finally play back your music, the MP3 tunes sound pretty darn good to this sometime-musician's ears. On two different desktop machines, I got playback sound as good as when I played the CD directly on the PC.

While just about any machine can play back the music faithfully, recording it is another story. My office PC, a Compaq Deskpro with a 266Mhz Pentium chip, had to struggle to record tunes from a CD at the highest fidelity when I was running a half-dozen programs, including e-mail, in the background. At one point I even got this message: "I can't do it." Once I closed a few programs, I recorded tunes at a snappy pace. In fact, I recorded a half-dozen selections from a CD before the first piece was through playing. On an older home PC with a 133Mhz Pentium, I couldn't record at all at the highest quality. To record on that machine, I had to accept lower quality. But the playback quality was certainly decent, if slightly less clear.

The homeboys may prefer their boom box to my laptop, but their music won't sound any better than mine--and I'll be able to click on my top tunes anytime, which is more than they can do.