RealNetworks Inc. said today it has settled its antitrust lawsuit against its longtime adversary Microsoft Corp.

Terms of the combined $761 million deal include wide-ranging partnerships between the parties on games and music.

The settlement includes a $460 million up-front cash payment to resolve all damages claims and a series of technology licenses and commitments under which Real will obtain long-term access to Windows Media technologies.

But perhaps more importantly, the deal includes a music and games partnership under which Microsoft will pay Real $301 million in cash and agree to provide services over 18 months in support of Real’s product development, distribution, and promotional activities.

Microsoft will provide promotional and marketing support for Real's Rhapsody digital music subscription service on all MSN properties, and will offer Real's suite of downloadable games through MSN Games and Xbox Live Arcade for Xbox 360.

Microsoft can recoup some of the $301 million by earning credits for each Rhapsody subscriber who is referred through MSN. The amount per subscriber was not disclosed.

"Today we’re closing one chapter and opening a new one in our relationship with Microsoft," said Rob Glaser, founder and CEO of RealNetworks, in a statement released prior to a joint press conference with Microsoft chairman Bill Gates to announce the deal.

"The legal chapter is being closed with an appropriate and fair outcome that sets the stage for a very productive and collaborative relationship between our companies," Glaser continued.

Seattle-based RealNetworks sued Microsoft in December 2003, accusing the software giant of illegally forcing Windows users to accept Microsoft's digital media player by entering into restrictive licensing agreements with PC makers.

RealNetworks said its RealPlayer suffered as a result, and initially sought damages of more than one billion dollars

"This agreement will provide MSN’s millions of customers with easier access to subscription services for the music and games they love," said Gates in a statement. "Digital music is one of the fastest growing segments of the online entertainment industry, and by promoting Rhapsody’s subscription music services from within MSN, we will provide a better experience for our users."