Yahoo Folds Music Unlimited

By Richard Menta 2/4/08

Real Networks, whose Rhapsody service has shown good growth lately, has taken over another competitor. Yahoo announced that it will fold its Yahoo Music Unlimited service into Rhapsody America, a digital music subscription platform that is itself a product of Real Network's Rhapsody servicec absorbing MTV's now defunct Urge service. Yahoo will continue to handle song downloads and Internet radio, but subscription-based Yahoo Music Unlimited users will be migrated to Rhapsody.

Rhapsody is the leader in the music subscription field - well ahead of Napster which, according to a recent Digital Music News analysis I oversaw last November, showed flat growth the past year. Unfortunately, subscription services have never really taken off with the public who seem prefer ownership over rental when it comes to how they consume music. Still, the Yahoo acquisition is great news for Real and Rhapsody. The deal should ensure Rhapsody's rise into the number two digital music eCommerce service and a stronger challenger to Apple's iTunes business. Direct access to the Yahoo audience will also help fend off Amazon's new MP3-only service, which yesterday joined forces with Pepsi to promote a big MP3 giveaway during the Super Bowl.

In related News Real Networks trimmed 10-12 employees the other week, prior to the company's quarterly earnings call due on February 7th.

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