// New Yahoo Music Unlimited Announced //

[System.S]

Yahoo's subscription music service is only $6.99 per month

Yahoo announced it's new Yahoo Music Unlimited with a monthly subscription fee that vastly undercuts its competition. The new service will initially offer a million songs from all major labels latest releases and back catalog. An annual subscription is $60.

The move heats up the subscription service space which industry leader Apple feels is a losing proposition due to this type of competitive cost cutting. Yahoo's main rivals include RealNetwork's Rhapsody and Napster which both charge $179 for an annual subscription.

Yahoo Music Unlimited is completely separate from Yahoo's recent acquisition of the MusicMatch subscription and download service which cost them $160 million dollars last year. The key difference is portability. Yahoo Music Unlimited allows subscribers to transfer songs to ten portable music devices that utilize Microsoft's WMA digital music format whereas Musicmatch does not allow portability. Yahoo lowered the subscription price of Musicmatch to $6.99. Debuting a very similar model is not the most savvy of business moves for Yahoo since the services have the potential to not only confuse Yahoo's visitors, but also cannibalize each other's customers.

The new service and price point will not have an immediate impact on the online music space. "What you have to realize is that we are still in the nascent stages of the online music business. Download and music subscription services only account for about 2-3% of overall music sales," states Futuremusic's Dan Brotman.

It's not apparent if the $6.99 per month is introductory pricing or a new price point, and Yahoo hasn't ruled out increasing the fee. However, as the Web's most trafficked web site, Yahoo brings considerable marketing muscle to the table. Its substantial power gives it a considerable advantage over its opponents and this should not be taken lightly.