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Subscriptions a third of the price of Napster's

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Yahoo! today opens the virtual doors of Yahoo! Music Unlimited (YMU).

And it has immediately issued a challenge to rival music download subscription services to lower their prices in response to its own bargain-basement "introductory" tariffs.

The US-only service is backed by MusicNet, the online music distributor formerly owned by a consortium of major labels, but now held by US VC firm Baker Capital.

MusicNet also supplies music to AOL's download service, but Yahoo! appears to be unconcerned that its partner is also working with one of its closest rivals. It is more interested in MusicNet's catalogue of more than 1m songs from all the major labels and some 25,000 indies. YMU's songs are encoded in Windows Media Audio 10, at 192Kbps.

MusicNet claims to hold the largest catalogue of digital music, most recently touting the 1.3m songs available via its servers. Apple this week said its US iTunes Music Store was offering 1.5m songs.

The company will deliver songs to YMU under both unlimited-download subscription and a la carte download licences. YMU will offer the customary 30s song previews. However, it's remarkably cheap as these things go: an introductory annual subscription costs $60, while a monthly package costs $7.

The subscriptions include transfers to portable MP3 players, which is a major blow to Napster and RealNetworks' Rhapsody, which charge $15 a month. It's not clear at this stage how long Yahoo!'s introductory pricing scheme will last, but in the price-sensitive world of digital music, even a short period may be enough to reel in a whole host of consumers who might otherwise turn to Napster. Yahoo! sources told The Register the pricing is likely to stay where it is.

One-off download prices are standard: 99 cents per track, though YMU subscribers will get them for 79 cents. Downloads can be burned to CD and used on up to five PCs.

YMU is less of a threat to Apple's iTunes Music Store than it is to Napster and co., largely because of ITMS' strength in the Mac market - YMU is Windows-only - and Apple's iPod traction. That's not to say that Apple should ignore YMU - Yahoo!'s brand recognition counts for a lot, and it has access to millions of individuals who use its other services. But it's really rival Windows-based subscription service providers who have to worry, particularly given YMU's pricing, if it can be sustained.

Yahoo! is calling YMU a "beta" release, presumably while it works on integrating the service into Musicmatch, which it acquired in September 2004 for $160m. From today, Musicmatch subscription package prices will fall to match those of YMU. Eventually, Musicmatch Jukebox and YME will become one app.

The service is accessed through Yahoo! Music Engine jukebox software, available as a free download. It cunningly ties in with Yahoo! Messenger to allow subscribers to share songs with each other. And presumably Yahoo! will be using its IM utility to promote YMU to the millions of Messenger users out there.

Many of them aren't based in the US of course, and while Yahoo! said it had no overseas launches to announce, or potential launch dates, it's clear that it wants to expand to Europe and beyond. MusicNet's established presence in the UK will smooth the path toward European incarnations of YMU. ®

Related stories

Apple iTunes sales sail past 400m
Former RIAA chief goes after Apple's 'anti-consumer' CEO
CD Wow! enters download biz
Major labels sell off MusicNet
HMV swaps digital music partners
Yahoo! snaps up Musicmatch

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