March 7, 2005 4:48 PM PST

Yahoo readies iTunes rival for launch

Web giant Yahoo is poised to launch a new digital store and music player, aiming to compete more directly with Apple Computer's successful iTunes service, according to sources familiar with the project.

As previously reported, Yahoo has been working on the project along with digital-music wholesaler MusicNet since before the $160 million purchase of rival music company Musicmatch. Sources familiar with Yahoo's plans said the new store and software had been scheduled to debut early this week but that the launch date was pushed back.

Representatives from Yahoo and MusicNet declined to comment for this story.

Yahoo's full-fledged entry into the digital-music retail business could help shift a market that has remained tilted strongly in Apple's favor. Yahoo has already built a large and loyal following for its streaming-music and video service, and could parlay that into music sales.

Indeed, the company's Launchcast radio services was the highest-rated Webcasting service online in January, according to ratings firm Arbitron and ComScore Media Metrix, attracting more than 2.2 million people that month.

However, Apple's dominance has been challenged by other giants, ranging from Sony to Microsoft, without substantially decreasing the iPod maker's market share. Last week, Apple said it had sold more than 300 million songs through its iTunes store since its launch.

"You have to look at how to create a linkage between a device and the online service," GartnerG2 analyst Mike McGuire said. "But given Yahoo's traffic and their very active communities, the potential (for success) is there."

Yahoo has begun to streamline its music and multimedia properties over the past few months, changing the name of its Launch site to Yahoo Music and consolidating its entertainment businesses in a Santa Monica, Calif., office near Hollywood.

The new MusicNet-powered music service will be integrated into Yahoo's existing infrastructure, possibly including features such as links to its popular instant-messaging program, sources said. MusicNet's technology allows companies to offer subscription services or per-song downloads, and is used by Virgin Digital, America Online and others.

Sources close to the company said the new service is likely to launch by the end of the month.

12 comments

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yahoo music store
they might have lots of traffic but good luck if it all hangs on windows media player.....try again boys
Posted by kosmofenster (6 comments )
Reply Link Flag
They don't get it
Apple iPod purchasers are loyal to Apple. Let's face it unless its the price point and no glitch in software (of course there will be glitches and it will mess things up and they'll want the dough) why bother? I wouldn't risk my iPod on anything wonkie. C'mon, go figure out something else out instead of trying to copy Apple. It all keeps looking like a Wanna-be world. Jobs still has 'em beat!
Posted by Ron Stark (7 comments )
Reply Link Flag
True...but...
If we didn't have competition there wouldn't be anything to brag
about! GO APPLE!
Posted by lilrazztx (25 comments )
Link Flag
Can't wait!
It's about time someone gave apple a run for their money. Just wait until all the ipod users find out that apple is locking them into the itunes store by refusing to support any other store. It's like buying a sony CD player that will only play music from the sony record label. Lame! I'm sure yahoo will treat their customers better than arrogant steve jobs. Can't wait to see the new stuff from yahoo.
Posted by (2 comments )
Reply Link Flag
millions of iPod owners
Sadly, I don't think all those millions (10 and counting) iPod
owners are suddenly going to realize that the iPod doesn't
support music from other stores. I'd be willing to bet most
already know that! Even if you didn't, the little iTunes CD comes
with the darn thing, and once you install that, boom already in
the iTunes music store. So I don't think there is suddenly going
to be a huge revolt! Has there been a huge revolt by owners of
the Dell DJ, Rio whatever, etc. because they can't use iTunes?
Your anaolgy of using a Sony CD player and being locked into
Sony music is flawed because in that case you would be locked
into a subset of all music. In the case of iTunes, you have just
as big (if not bigger) selection of music as any other store, so
they are in no way limited. Further, most stores offers the same
pricing scheme as the iTunes store, so exactly why would
someone be upset? Unless they are the sort of person who likes
change for the sake of change, I guess. Perhaps I am just lazy,
but I wouldn't see the point in getting into full riot gear because
I can't buy the same song at the same price from a competing
store.
The one possible problem would be if Apple suddenly went belly
up, thereby leaving all iPod owners up the figerative creek.
Since Apple has officially been going out of business since
sometime in 1984 it's just a matter of time, right?
Posted by (20 comments )
Link Flag
Where are the throngs of people...
demanding to use other music stores with their iPod and
more importantly, what benefits are there to using other
music stores.

There is nothing (almost) that other music stores have that
ITMS doesn't.
Posted by CitizenX (522 comments )
Link Flag
Lock me up then!
So I am locked into their store with over a million tracks, and
GROWING!

First of all, iPod users are NOT locked in. Barring the WMA
format, i can import just about any other song i purchase into
my iPod.
Posted by Thomas, David (1947 comments )
Link Flag
Just think for a second
It's not like Apple could blow such a lead in a market, right? I mean, not even Steve Jobs could take a company from the forground of an emerging technology and doom it to a mere 3% of the market a few years later?
Well, maybe the question should be can he do it again...
Posted by catchall (245 comments )
Link Flag
Yahoo! /MusicNet
I dont think that Yahoo! will get very far in the online music world, in the form of subscriptions or pay per download. People like the LaunchCast (or Yahoo! Music now) content and streams. But Yahoo! already tried that segment before and stumbled. Remember PressPlay? The illfated music service launched by Sony and Universal- two of the largest and most prominent labels. Yahoo! teamed with PressPlay before and that apparently didnt fare well. So why will the new MusicNet deal work out? Yahoo! has the distribution and member base, yes. But they lack the edginess of Apple. Apple is hip, popular, and intriguing. Personally, when I think of Yahoo! I think search, email and maps. (Of course I'm just one of millions of their members but I'm sure that most their members haven't even heard of half their services). So why will this highly touted music service be any different? Just because they have the software and online distribution (i.e. sbc/yahoo, and musicmatch) means nothing. I just hope that Yahoo! knows how to pull this off before they face a humiliating defeat by the hand of "the little apple that could"
Posted by (3 comments )
Reply Link Flag
No way they'll bite something
No way they'll bite something of apple's iTunes..

It has already been mentioned here that Apple has its loyal customers, good service and user-friendly interface & software.

Yahoo has many visitors, many listeners to Launchcast service, but there won't be many of them who would turn also to music shop..
Posted by (10 comments )
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