Original URL: http://www.theregister.co.uk/2005/08/19/yahoo_maintains_music_pricing/

Yahoo! to keep music prices low

Tightens screw on Napster, Real and co.

By Tony Smith

Posted in Financial News, 19th August 2005 12:59 GMT

Yahoo! has confirmed it will maintain its low music subscription charges as its Yahoo! Music service moves out of its testing phase.

In an interview with the Reuters news agency, Yahoo! marketing chief Cammie Dunaway said the trial pricing plans would stand.

YM was launched in May, and offered monthly unlimited-download subscriptions for $7. Subscribers who made a 12-month commitment to the service paid only $5 a month.

Those figures compare with the $15 a month services like Napster charge for the same package, which includes full support for portable MP3 players.

Yahoo! this week unveiled an aggressive advertising programme to promote its music service. The scheme includes TV advertising during the MTV Awards show on 28 August, along with ads integrated into upcoming video games, the company said.

Yahoo! Music is currently only open to US consumers. The service is supplied by online music distributed MusicNet, and is compatible only with Windows Media-based devices. iPod owners need not apply.

But therein lies Apple's strength, leaving Yahoo! to fight it out with rival WMA suppliers like Napster, Virgin Digital and Wal-Mart, and left-field players like RealNetworks and Sony. With hardware sales driving music download demand, and Apple owning the hardware market, it's also unsurprisingly got the lion's share of the download business. And its iTunes jukebox software has helped it win customers who just want to buy songs to play on their PCs.

Crucially, until the iPod supports WMA, there's little reason for an iPod owner to buy songs from anyone other than Apple, insulating the company from the fight between the other vendors, all tussling for the attention of Creative, Samsung, iRiver etc owners. So does Apple's focus on sales rather than subscriptions. ®