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Yahoo Introduces Online Music Service ! - 5/11/2005 8:00:00 AM   
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Internet powerhouse Yahoo Inc. is introducing an online music subscription service that will enable consumers to download thousands of songs onto their portable MP3 players for $60 annually, undercutting the prices of the current industry leaders by more than 60 percent.

The Sunnyvale-based company planned to unveil "Yahoo Music Unlimited" Wednesday in a direct challenge to similar subscription services offered by Real Networks Inc. and Napster Inc.

Yahoo is offering unlimited downloads from a library of 1 million songs for $6.99 per month or $60 for an annual subscription. That's a sharp discount from Los Angeles-based Napster and Seattle-based Real Networks Inc., which both charge $14.95 per month, or just under $180 annually, for similar services.

By encouraging consumers to become song renters instead of song owners, Yahoo, Napster and Real Networks are pursuing a different sales approach from Apple Computer Inc.'s popular iTunes music store.

Under the rental model, consumers must pay a recurring fee and synchronize their portable music players with the subscription service at least once a month to preserve the music. If the subscription expires, the previously downloaded music becomes unplayable.

Renters also can't transfer downloaded songs to a compact disc without paying an additional fee. Yahoo will charge its subscribers 79 cents to own a song, below the 99 cents-per-song price of Apple's music store.

Yahoo's subscription service is compatible only with MP3 players that use Microsoft Corp.'s digital music format. That means the service won't work with Apple's iPod, the most popular MP3 player. The list of 10 devices that will work with Yahoo's service initially include Dell Inc.'s DJ player and Creative Technology Ltd.'s Zen Micro.

"This is all about expanding the market," said Dave Goldberg, general manager of Yahoo's music division. "We are convinced this is the way you should be listening to your music."

Yahoo expects its low-priced subscription service to make money, Goldberg said.
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