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Yahoo to pull the plug on its Internet music service

Yahoo Inc will cease operating its online music subscription service and switch its customers to RealNetworks Inc's Rhapsody music service as part of a new deal between the companies that stipulates that Yahoo promote Rhapsody on its site.

Terms of the deal, expected to be formally announced later yesterday, were not disclosed. The move is part of Yahoo's overhaul of its online music offerings.

"People want to have music and consume it in lots of different forms and across different devices and platforms and we want to have a play in as many of those as we can," said Scott Moore, Yahoo's head of media.

Moore said the partnership would allow Yahoo to focus its energies more on free, ad-supported music and other media offerings.

Yahoo Music Unlimited lets users download an unlimited number of tracks that are playable as long as their plan is active.

Under the Yahoo-RealNetworks partnership, subscribers to Yahoo Music Unlimited will be shifted to the Rhapsody service sometime in the first half of this year. Yahoo subscribers' music library and payment plans will remain the same for a limited time after the switch, but those wishing to remain on Rhapsody eventually will be required to sign up at Rhapsody's rates.

Yahoo's subscription rates range from US$5.99 a month, if users pay for a full year in advance, or US$8.99 a month. Rhapsody memberships start at US$12.99 a month.

Yahoo executives declined to say how many subscribers their music service has. Rhapsody has 2.75 million subscribers worldwide, including customers signed up for its premium radio and mobile music services.

As part of its deal with RealNetworks, Yahoo will integrate Rhapsody into its online music portal, something both companies hope will translate into new Rhapsody subscribers.

"They are our subscription partner going forward and there's money to be made for both of us in that," Moore said.
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