RealNetworks (NSDQ: RNWK) surprised analysts with a small third quarter profit, due to cost cutting, but the company’s revenue dropped 8 percent. Sales at RealNetworks’ music, technology products and solutions, and games businesses all dropped, compared to a year ago. The only unit to post an increase in sales was its media software and services division, which includes RealPlayer Plus. Subscribers to the company’s Rhapsody music service dropped to 700,000 from 750,000 during the previous quarter.

The company also said it had appointed industry veteran Hank Skorny as its SVP of media cloud computing and services, as part of a new effort to create products and services that “leverage cloud computing to make digital media available to consumers whenever and wherever they want it.”

Press release | Webcast (5 p.m. ET)

[David adds] Glaser led off the earnings call discussing how the emergence of Facebook and the iPhone (and iPod Touch) as mass products will have a “revolutionary” affect on the company’s ability to make money. He pointed to the creation and subsequent mass adoption of the personal computer in the early 1980s, followed by Windows and the web browser, made RealNetworks’ existence possible.

“The combination of those first three created the platform Real Networks was built on,” Glaser said. “The Facebook and iPhone are the fourth. We’ve shipped four new products that align with those platforms, including Real Player SP, which allows users to move videos to their personal devices and share with others on Facebook and Twitter. The second product is casual games on Facebook, and we have 3.5 million users per month. We’ve sold 2 million virtual items were gifted before we instituted micropayments into the games on Facebook. Aside from that, we’ve launched free and 11 paid games on iPhone. iPhone has accounted for 15 percent of our mobile revenue.”

Real Money challenge: Still, Glaser conceded that Facebook and iPhone are challenging for the company in terms of driving revenue right now. Glaser: “Games are typically sold for less than $3 or less than half other online games. While we started making progress in understanding these new monetization methods, it will take time. The traditional way we make money is either from carrier services and direct from consumers. While the game prices are lower, the volumes on the iPhone app business are also a lot higher. And although we’re not there yet, we will soon see virtual wallets on Facebook pages, making micropayments much more commonplace.”

Waxing Rhapsodic: Asked about how RealNetworks’ paid service Rhapsody can compete with free apps like Pandora, Glaser acknowledged the challenge, but offered confidence that those other services appeal will not hold as strong. Glaser: “Rhapsody, no other product offers unlimited access to music on the iPhone. it’s our firm belief that it will continue to be a premium paid product. Europe, where record labels have been more flexible, Spotify has been very successful. So we think we have significant opportunities going forward as well.”