Yahoo undercuts rivals with new music service

Yahoo Inc. on Wednesday plans to launch a trial version of Yahoo Music Unlimited, a new, aggressively-priced online music subscription service.

For an introductory price of US$59.88 a year, or $6.99 when paid monthly, the service will give users access to over 1 million songs from all major record labels and most independent labels, Yahoo said in a statement.

With its pricing, Yahoo is undercutting rivals RealNetworks Inc. and Napster Inc., which both charge about $15 a month for comparable services. Apple's iTunes, the biggest online music store, doesn't offer subscriptions but charges users per song or album download.

Yahoo will offer tracks in Microsoft Corp.'s Windows Media Audio (WMA) format encoded at 192k bps (bits per second), a high quality when compared with other services. Users can also transfer music to digital media players that support Microsoft's latest digital rights management (drm) technology.

Digital media players that support the Microsoft technology, known as Janus, include Iriver Inc.'s H10, Dell Inc.'s DJ and Creative Technology Ltd.'s Zen Micro. Apple's iPod music players, the most popular digital media players, don't support Microsoft's technology.

Subscription services such as Yahoo's, Real's Rhapsody and Napster's offer access to music transferred to portable devices as long as the user maintains his subscription. The tracks become unplayable when consumers let their subscription lapse.

Yahoo Music Unlimited also will offer songs for purchase for $0.99 a track. Subscribers will be able to purchase and permanently own tracks for $0.79 a piece. Purchased songs can be burned onto a CD, transferred to portable devices and used on a total of five PCs, according to Yahoo.

Yahoo Music Unlimited includes the Yahoo Music Engine, software that will let users manage their music collection. Users will also be able to share their music with others via Yahoo Messenger and will get access to Yahoo's LAUNCHcast online radio service, Yahoo said.

The new music service is Yahoo's latest online music move. The Sunnyvale, California-based company last year acquired MusicMatch Inc., which offers a music subscription service and software. The MusicMatch products will remain available, but eventually be merged with the new Yahoo Music Unlimited service, Yahoo said.

Yahoo Music Unlimited will be released in beta version first and will initially only be available to users in the U.S.

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