The Wall Street Journal-20080204-Music Unlimited No More- Yahoo Aims to End Subscription Service- Promote Rhapsody
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Music Unlimited No More; Yahoo Aims to End Subscription Service, Promote Rhapsody
Full Text (443 words)Yahoo Inc., as it ponders a takeover offer from Microsoft Corp., plans to shutter an online music service that charged users a flat monthly fee to access a vast library of songs.
In place of that service, Yahoo, Sunnyvale, Calif., has cut a deal to use its online audience to promote Rhapsody, a rival subscription music service jointly owned by RealNetworks Inc. and Viacom Inc.'s MTV. Yahoo said it will migrate existing Yahoo Music Unlimited subscribers -- the number of which it didn't disclose -- to Rhapsody accounts in the coming months.
The music deal was struck before Microsoft's disclosure of its $44.6 billion takeover offer for Yahoo on Friday. Financial terms weren't disclosed.
Yahoo's move is part of a broader retrenchment by the company in categories in which it hasn't found much success, such as podcasting. Last week, Yahoo issued a tepid financial forecast for the year and announced plans to lay off 1,000 of its 14,300 employees.
The Internet company made a big splash when it entered the subscription music business nearly three years ago with an aggressively priced service designed to be a compelling alternative to Apple Inc.'s iTunes store. Yahoo Music Unlimited, now priced at $8.99 a month, let users listen to an unlimited amount of music as long as they remained paying subscribers.
While many music and technology executives believe subscription music services hold promise, such services haven't yet found a mass audience, in part because of technical restrictions that complicated listening to songs away from personal computers.
Ian Rogers, vice president of video and media applications at Yahoo, said the company decided to discontinue its own subscription service in part because of the expensive effort it would have to make to ensure that the service could work with a wide range of electronic devices. Rhapsody is increasingly integrating its service with cellphones and home-entertainment devices such as TiVo digital video recorders.
"We're not investing in a lot of the killer features that are the icing on the cake," said Mr. Rogers.
Rob Glaser, chief executive of Seattle-based RealNetworks, said the exposure that Rhapsody will get on Yahoo -- one of the top music destinations on the Web with its large library of music videos, radio stations and other content -- will help introduce the service to a wider audience. "They're going to be among our most important partners," Mr. Glaser said.
RealNetworks has 2.75 million subscribers to various music services, including Rhapsody.
Yahoo executives said the company intends to pursue a more "open" music strategy, in which it will provide music-related services that are accessible to Internet users as they visit blogs and other independent Web sites.
