Microsoft and RealNetworks have reached an out-of-court settlement on their long-running antitrust dispute.

Despite its record-breaking fourth quarter results, Apple shares declined in response to the settlement between Microsoft and RealNetworks, in which the latter companies will share resources on digital music initiatives.

The rapprochement between the two companies - ancestral foes in the digital media space - goes further than pure settlement. The companies have entered into a partnership to promote Real’s digital media services - principally its Rhapsody digital music service - through Microsoft’s MSN service and operating system.

The value of the settlement is $761 million. It resolves a $1 billion antitrust suit bought against Microsoft by RealNetworks.

The settlement marks the resolution of the last major private antitrust case against Microsoft in the U.S., and RealNetworks' withdrawal of an antitrust case against the software vendor still pending in the European Union.

RealNetworks also gains long-term access to Windows Media technologies to enhance its own media software, according to the companies.

Real will also promote Windows Media technologies within RealNetworks' Rhapsody to Go service, according to the companies.

It means a strong alliance has now emerged to compete with Apple in the digital music space.

RealNetworks CEO Rob Glazer said the companies plan to integrate his firm’s services into MSN Search so that when users search for an artist, they can play entire songs from that artist in MSN Search.

Microsoft will add a Rhapsody tab in MSN Messenger. The news emerges one week after Microsoft abandoned talks with major labels over the creation of a music subscription service through MSN.