Yahoo ends music subscription plan

By | February 5, 2008 at 2:06 AM

Yahoo is dropping its subscription music service and replacing it with Rhapsody America, a competing service operated by RealNetworks and MTV Networks. As part of the deal, Yahoo will exclusively promote Rhapsody on its site and integrate the service into Yahoo Music. The two plan to collaborate on other digital music services such as music downloads. It’s part of a broad strategic partnership announced Monday by the two companies.

Yahoo and RealNetworks said the process of transferring subscriptions from Yahoo Music Unlimited to Rhapsody will start midyear and will be painless.

Existing Yahoo subscribers will be able to maintain their Yahoo pricing tiers for a limited, though undisclosed, period of time. Real’s Rhapsody to Go is priced at $15 a month, and Yahoo Music Unlimited costs $9 a month.

Yahoo is the No. 1 music site on the Web, claiming 23 million visitors to its music section. But only a small percentage of those signed on for Yahoo Music Unlimited. The company hasn’t said how many Unlimited subscribers it has.

Yahoo announced plans to de-emphasize its subscription service several months ago while focusing on its main music site. Monday’s move marks a strategy for the site that relies more on partnerships, not a move away from the music business, said Ian Rogers, vice president video and media applications at Yahoo.

The company also said Monday that it has acquired FoxyTunes, a toolbar plug-in that lets users control desktop and Web music players and find lyrics, videos and other music info.

“We’re continuing to believe in and invest in the music business,” Rogers said. “We’re really just taking a different approach.”

For Rhapsody, which has partnered with Best Buy, TiVo and other companies in recent months, the Yahoo deal will help the company raise its profile, said Dan Sheeran, senior VP business development at Real.

“We basically have two objectives: to make the experience more mainstream with portable devices and living room devices and then tell the world about that,” Sheeran said. “This is a big part of how we achieve the latter.”

Rhapsody, which is jointly owned by MTV and RealNetworks, doesn’t disclose how many subscribers it has. RealNetworks reported 2.7 million subscribers to all of its services including Rhapsody at the end of the most recent earnings quarter.

The deal leaves Rhapsody, Napster and Microsoft’s Zune Pass as the last subscription services standing, with Zune Pass being available only to consumers who buy a Zune MP3 player.

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