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RealTime IT News

Yahoo Gets Into The Groove

Buyers beware.

That is the message Internet portal giant Yahoo is sending the millions who are plunking down big bucks to own downloaded music. The search firm believes it has seen the future and, for the most part, it isn't buy-to-own.

Instead, the San Jose-based company today launched an online music subscription service that enables users to download songs onto portable MP3 players for $60 per year, or $6.99 monthly, undercutting current music subscription leaders' pricing.

In contrast, Los Angeles-based Napster and Seattle-based RealNetworks both charge $14.95 per month, or $180 annually.

The move immediately positions Yahoo, which has an estimated 100 million site visitors per month, as a player to challenge the services offered by RealNetworks and Napster. Both of those market leaders charge as much as 60 percent more for their online music services. The entrance of Yahoo to the subscription market is also seen as a challenge to Apple's iTunes, which has pioneered today's conventional method of owning songs, instead of renting them.

"We are committed to being at the forefront of the rapidly growing online music segment," Lloyd Braun, head of the Yahoo Media Group, said in a statement. "Yahoo Music Unlimited draws on the best of Yahoo to provide personalization and community features unlike anything else in the marketplace."

Yahoo will offer the tracks in the WMA format and Windows Media Digital Rights Management 10 (WM DRM 10). This support will enable subscription tracks to be transferred to any portable device that supports DRM technology.

"From premium radio to an entirely on-demand experience, Yahoo Music Unlimited has assembled all the key elements to fulfill consumers' needs," Dave Goldberg, vice president and general manager of Yahoo Music, said.

Analysts estimate the online subscription services will surpass buy-to-own music by 2009.

RealNetworks says it currently has more than 1 million subscribers, while Napster claims 410,000 subscribers.

The news was greeted by the street negatively, with RealNetworks' stock plunging nearly 22 percent in trading on the NASDAQ, while shares of Napster dropped 32 percent. Apple also felt the heat, as its shares dropped 7 percent.



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