In a development that only Scrooge and the Grinch would find amusing, the tech industry has entered into a fevered period of pre-holiday job cuts. In the last few weeks, there have been layoff announcements from Adobe (ADBE) (680 jobs), Electronic Arts (ERTS) (1,500 jobs), Sprint (S) (up to 2,500 jobs), Microsoft (MSFT) (800 jobs), RealNetworks (RNWK) (70 jobs), AOL (100 jobs), Sun Microsystems (JAVA) (3,000 jobs), Blue Coat (BCSI) (roughly 150 jobs), Lexmark (LXK) (825 jobs) and Nokia Siemens (NOK) (potentially north of of 5,000 jobs).

Applied Materials (AMAT) could be next.

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RealNetworks (RNWK) shares have spiked more than 10 percent this morning, on zero news.

TheStreet.com notes that there has been “heavy upside options activity” in the shares, asserting that “volume was nothing short of explosive” in both the stock and the options.

The last time the stock had a big move, the company won approval from Apple (AAPL) to offer an application for accessing Real’s Rhapsody music subscription service on the iPhone/iPod app store.

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The news this week that Napster is relaunching with a $5-a-month subscription plan that includes 5 free MP3 downloads would appear to be a troubling development for RealNetworks’ (RNWK) rival Rhapsody service, which will set you back $13 a month for a streaming service that lacks the free MP3s. It is also no doubt irritating to Real that it comes from a company that is now a unit of Best Buy (BBY): in the past, the Best Buy digital music store was a re-branded version of Rhapsody, which came pre-loaded on non-Zune, non-iPod music players sold by the retailer.

Earlier this week, I chatted about the situation with Neil Smith, VP of business management for Rhapsody America. His spin on the Napster story is that what they’re really doing is going head-to-head with Apple’s (AAPL) iTunes store–that Napster is “all about the downloads.” He says Napster basically wants to use the new approach to get into the pre-paid music gift card market, using the free downloads as a driver to steal share from Apple. He thinks selling tracks is more their goal than “turning the tide toward subscription from purchase,” which is where Real is focused.

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After writing about how Napster renegotiated its deals with record labels to offer its music subscription service at a lower price, I called RealNetworks (RNWK), which offers the Rhapsody service, to see if its executives were excited about cutting similar deals that would allow it to offer its own $5-a-month music service. For years, after all, people trying to popularize music subscriptions–which allow you to listen to anything you want for a monthly fee–have been telling me the concept is great but the price the record labels want is too high.

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RealNetworks (RNWK) is upping the ante in litigation seeking to prevent it from distributing DVD-copying software. The company argues the Hollywood studios are a “price-fixing cartel” that have no right to prevent consumers from duplicating the movie discs.

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Internet streaming media software developer RealNetworks (RNWK) this evening reported Q1 sales of $140.8 million, down 5 percent year over year, and in line with analysts’ estimates, and a net loss of 10 cents per share, worse than the 6-cent loss expected.

Citing “uncertainty regarding consumer spending,” the company declined to give a forecast for the current quarter. “The company expects 2009 to be a challenging year for consumer spending, online advertising and corporate infrastructure spending,” reads the company’s press release.

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Starting late last year, movie studios began peddling premium-priced DVDs that come with the right to download a digital copy of the movie onto a computer.

Now a federal judge will weigh in on whether the studios are the only ones who can legally make those copies, or if other companies can jump on the bandwagon.

Judge Marilyn Hall Patel of U.S. District Court in San Francisco on Friday will open a hearing to evaluate whether RealNetworks (RNWK) can sell a computer program called RealDVD that allows consumers to copy DVDs onto computers.

Last fall, the studios won a temporary ban on the sale of RealDVD. If Judge Patel rules the program can go back on the market, it could hamper Hollywood’s efforts to cash in on consumer demand for digital copies of the DVDs they buy.

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RealNetworks, which has previously professed its supposedly neutral position in the copyright controversy over the popular Facebook app Scrabulous, is now sneaking itself into the mix: It is quietly introducing a version of Scrabble on Facebook, called “Scrabble by Mattel,” through its subsidiary Gamehouse. The Mattel version is only available for users outside the U.S. and Canada, though as this New York Times story says, it relies on users to be honest about their location to make that distinction.

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At D5 last week, we announced our new RealPlayer, which makes it easy for anyone to download video from the Internet and keep it for personal use. Not surprisingly, we’re excited about the product. But what I want to discuss today are the divergent reactions to the product and the ideas behind it–it’s basically a Rorschach ink-blot test for how people feel about Internet media and consumer choice.

People who have seen the new RealPlayer fall into two groups. The first group has two reactions–the first being “Wow, this is cool,” followed quickly by “Of course, this was inevitable.” This group believes that progress is inexorably leading to more consumer choice and empowerment, and that this is a good thing. PVRs are becoming a standard TV-viewing feature, and consumers want the same level of control when they’re using the Web. I think of this as the “Manifest Destiny” group.

Different members of the Manifest Destiny group get excited about different aspects of the new RealPlayer. Idealists get excited either because they love how this technology empowers consumers, or because they have ideas that they want to propagate. The more business-oriented people in this group are excited about wrapping new business models around this expanded consumer choice. And of course techies want to know how it all works.

The second group also has two reactions (if they’re being honest). The first is “Wow, this is cool, but…” followed quickly by “Won’t this destroy” some sacred cow, typically an existing media business model. I call this group the “Flat Earth society” (and not in a Thomas Friedman sense).

This group typically asks a lot of questions about how the new RealPlayer works, seeking to find some fatal flaw. They ask questions about digital-rights management and the legality of downloading videos. We then explain the details, particularly how we respect DRM and how careful we’ve been in creating a product that has numerous substantial noninfringing uses. Indeed, the new RealPlayer is completely legal, just like a PVR, VCR or photocopier. After hearing our explanation, this group tends to sidle away glumly, kind of like Washington Generals fans learning the results of their team’s latest match against the Harlem Globetrotters.

The most surprising thing isn’t that both groups exist–having worked in Internet digital media for a dozen years, I know this dichotomy well. What’s truly shocking is how much the ground has shifted over the past two years.

Two years ago, the world seemed kind of split down the middle, with technologists on one side (Manifest Destiny) and content providers on the other (Flat Earth). But that’s not the case anymore.

To my surprise, of the people we’ve talked to so far, the Manifest Destiny group outnumbers the Flat Earth society by at least five to one. More shocking, even inside large media companies, Manifest Destiny thinking is not only ascendant but, in most cases, it’s carrying the day.

Why the big change? I think it has to do with the fundamental nature of media business models. Media businesses are generally based on accumulating the biggest audience possible, which means going where the audience is. Approaches based on locking down the content out of a fear of piracy are self-defeating. Media isn’t like water or oil, where there is fixed demand. Rather, the more prominent and available media is, the more the media gets consumed.

Successful media companies are generally made up of smart executives who get this. They know that simply trying to stop disruptive consumption patterns hurts much more than it helps. Indeed, the continuing free fall of the music industry, even after the industry’s many legal victories against P2P sites, speaks to the downside of misunderstanding this reality.

That doesn’t mean that DRM is 100% irrelevant, or that content-distribution windowing is going to go away, or that rights holders will no longer get paid for their content. But it does mean that embracing the consumer has got to be job No. 1 for everyone. When a great technology comes along–empowering consumers to download and save video, in this case–the winning approach for everyone is to embrace the technology, and then figure out the business models that work best with the technology.

In other words, the world isn’t flat, and more consumer choice and control really are Manifest Destiny.