May 10, 2005 4:21 PM PDT

Yahoo takes on iTunes with new music service

Yahoo plans to launch a new flagship music service on Wednesday, in hopes of capturing a slice of the online music market now dominated by Apple Computer.

As earlier reported, the service is built in large part around a monthly subscription plan similar to those now offered by Napster and RealNetworks, which allow customers to take music onto their portable devices. However, Yahoo is deeply undercutting those rivals' prices, offering initial monthly subscriptions for just $6.99, compared with nearly $15.

Yahoo also has spent considerable time building links to its other products, such as its popular instant messaging application, with the aim of making community and legal music-sharing among subscribers a core part of the service.

News.context

What's new:
Yahoo plans to launch an early version of a new music service on Wednesday in an effort to take on Apple's iTunes.

Bottom line:
Song-sharing and the community aspect of the Web giant's new subscription plan are key--and could change the market dynamics of the online music business.

More stories on this topic

Record label executives who have seen the service, which is in part based on wholesaler MusicNet's technology, say the community aspect in particular shows a promising evolution for the online music business.

"They've unpacked the opportunities and social aspects of the peer-to-peer environment, taken the best aspects away from that, and put them back into their environment," said one top record label executive familiar with recent versions of the service, who asked not to be named.

Yahoo's entry could help change market dynamics that have tipped overwhelmingly toward Apple, which controls about 70 percent of both the MP3 player market and the digital song download market.

Yahoo has a nearly unparalleled reach, with more than 300 million users worldwide, and has already developed a loyal base of listeners who use its Launch music video and Web radio service. Indeed, record label executives say Launch can already be as important as traditional radio when debuting a new album.

Much will depend on the marketing muscle put behind the service, however. Other giants, including Sony, Virgin Digital and Microsoft, have launched their own iTunes competitors, and none have so far gained substantial traction in the market.

Apple's iTunes, by contrast, has sold more than 400 million songs in the two years it has been in operation. On Tuesday, it opened four new stores--in Denmark, Norway, Sweden and Switzerland--bringing its presence to 19 total countries around the world.

Yahoo has already dedicated substantial resources to its music business, however.

The Web portal bought a small digital music company called

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22 comments

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bad idea...
unless yahoo can get some serious content that distinguishes it from itunes, this is a loss maker. does anyone remember that wal-mart also has an online store? and yahoo is making a classic mistake - it's competing on price, not content.

the device drives the sales! who cares if yahoo has 300 million users - if they all have ipods, they'll go to itunes first.
Posted by (3 comments )
Reply Link Flag
bad idea...
unless yahoo can get some serious content that distinguishes it from itunes, this is a loss maker. does anyone remember that wal-mart also has an online store? and yahoo is making a classic mistake - it's competing on price, not content.

the device drives the sales! who cares if yahoo has 300 million users - if they all have ipods, they'll go to itunes first.
Posted by (3 comments )
Reply Link Flag
Many bugs, definitely beta!
The app didn't pass first run test (crashed after install). It is much slower than Napster.
I was also signed out of the service when I signed on to Yahoo Messenger with the same user name. I thought they were supposed to be integrated, not exclusive.

oh, and where's the equalizer????
Posted by behemot (4 comments )
Reply Link Flag
Many bugs, definitely beta!
The app didn't pass first run test (crashed after install). It is much slower than Napster.
I was also signed out of the service when I signed on to Yahoo Messenger with the same user name. I thought they were supposed to be integrated, not exclusive.

oh, and where's the equalizer????
Posted by behemot (4 comments )
Reply Link Flag
I am still waiting...
I support the idea, why spend so much money for music match and not make it be the heart of the system? I tested napsters subscription service and did not like the fact that I can not listen to all the songs that they have. I still had to buy music, I thought the idea was to have access to every last piece music. That was not the case so I canceled the service. I then looked in to Reals subscription server and it was the same. I will check this one too and if not then I know they will not have my money. I want all not some. Music Match is a very good music manager, why not use it? That is what I use to manage my music.
Posted by damiandennison (55 comments )
Reply Link Flag
I am still waiting...
I support the idea, why spend so much money for music match and not make it be the heart of the system? I tested napsters subscription service and did not like the fact that I can not listen to all the songs that they have. I still had to buy music, I thought the idea was to have access to every last piece music. That was not the case so I canceled the service. I then looked in to Reals subscription server and it was the same. I will check this one too and if not then I know they will not have my money. I want all not some. Music Match is a very good music manager, why not use it? That is what I use to manage my music.
Posted by damiandennison (55 comments )
Reply Link Flag
Nobody gets it..still
There is a quote from Mr. Goldberg that was reported on AP but
missing from this article. Here it is: "WE are convinced this is the
way YOU should be listening to YOUR music."

Anyone, particularly musicians and music consumers, should be
aghast at this statement. Yahoo's substitution of smug self
indulgence over genuine consumer interests aside, once again
we have yet another edition of nothing more than the proverbial
technology cart preceding the horse.

Of course, the so-called analysts are falling over themselves
with praise for this type of service, as they have in the past for
all of the other on-line music store failures. So I suppose its
fitting for a little reality check at this point and here it is: Music
is NOT a "rentable" commodity. It never has been, and it never
will be. Period. If you listen to music, you know why. If you don't,
you probably work for Microsoft.

So instead of simply dressing up Microsoft's same old
technology garbage in a brand new suit once again, wake me up
when someone comes up with a real alternative to what Apple
has established for on-line music sales. If the word
"subscription" is mentioned anywhere in the business plan, then
its worth reminding that the subscription model emperor still
has no clothes. For what should be obvious reasons, It never did,
and it never will, despite the spin from the new generation of
quick buck artists.
Posted by Terry Murphy (82 comments )
Reply Link Flag
More than subscription
While Yahoo does have a subscription element, you can still buy burnable tracks at the $.99 price point (like iTunes), or even $.79 if you subscribe (veru unlike iTunes). As a subscriber I can sample and even hang out with the full track on my Zen Micro before I buy it for $.20 less than the $.99 iTunes tracks, then burn the discounted track to a disc for my girl. I am finding everything that I need. Sure they may not have "the most obscure band in the world" in the subscription service, but they have everything I have needed so far. If you ask me, the market leading Apple may want to get with the times.
Posted by (4 comments )
Link Flag
Nobody gets it..still
There is a quote from Mr. Goldberg that was reported on AP but
missing from this article. Here it is: "WE are convinced this is the
way YOU should be listening to YOUR music."

Anyone, particularly musicians and music consumers, should be
aghast at this statement. Yahoo's substitution of smug self
indulgence over genuine consumer interests aside, once again
we have yet another edition of nothing more than the proverbial
technology cart preceding the horse.

Of course, the so-called analysts are falling over themselves
with praise for this type of service, as they have in the past for
all of the other on-line music store failures. So I suppose its
fitting for a little reality check at this point and here it is: Music
is NOT a "rentable" commodity. It never has been, and it never
will be. Period. If you listen to music, you know why. If you don't,
you probably work for Microsoft.

So instead of simply dressing up Microsoft's same old
technology garbage in a brand new suit once again, wake me up
when someone comes up with a real alternative to what Apple
has established for on-line music sales. If the word
"subscription" is mentioned anywhere in the business plan, then
its worth reminding that the subscription model emperor still
has no clothes. For what should be obvious reasons, It never did,
and it never will, despite the spin from the new generation of
quick buck artists.
Posted by Terry Murphy (82 comments )
Reply Link Flag
More than subscription
While Yahoo does have a subscription element, you can still buy burnable tracks at the $.99 price point (like iTunes), or even $.79 if you subscribe (veru unlike iTunes). As a subscriber I can sample and even hang out with the full track on my Zen Micro before I buy it for $.20 less than the $.99 iTunes tracks, then burn the discounted track to a disc for my girl. I am finding everything that I need. Sure they may not have "the most obscure band in the world" in the subscription service, but they have everything I have needed so far. If you ask me, the market leading Apple may want to get with the times.
Posted by (4 comments )
Link Flag
More than subscription
While Yahoo does have a subscription element, you can still buy burnable tracks at the $.99 price point (like iTunes), or even $.79 if you subscribe (very unlike iTunes). As a subscriber I can sample and even hang out with the full track on my Zen Micro before I buy it for $.20 less than the $.99 iTunes tracks, then I can burn the discounted track to a disc for my girl. I am finding everything that I need. Sure they may not have "the most obscure band in the world" in the subscription service, but they have everything I have needed so far. Until all of the labels get with the program, there are always going to be bands that you can't listen to in any of the services. Even Apple falls short when it comes to a little band called The Beatles. If you ask me, the market-leading Apple may want to get with the times (as well as the labels that are not licensing their music to these services).
Posted by (4 comments )
Reply Link Flag
More than subscription
While Yahoo does have a subscription element, you can still buy burnable tracks at the $.99 price point (like iTunes), or even $.79 if you subscribe (very unlike iTunes). As a subscriber I can sample and even hang out with the full track on my Zen Micro before I buy it for $.20 less than the $.99 iTunes tracks, then I can burn the discounted track to a disc for my girl. I am finding everything that I need. Sure they may not have "the most obscure band in the world" in the subscription service, but they have everything I have needed so far. Until all of the labels get with the program, there are always going to be bands that you can't listen to in any of the services. Even Apple falls short when it comes to a little band called The Beatles. If you ask me, the market-leading Apple may want to get with the times (as well as the labels that are not licensing their music to these services).
Posted by (4 comments )
Reply Link Flag
Confessions of a Y! Music Engine Engineer
For some of the human aspects behind this product, feel free to visit my weblog. I was on the team that built this product.

<a class="jive-link-external" href="http://blog.360.yahoo.com/blog-FDuiCSg4eqinB8z.GGJ7TmAz?p=89" target="_newWindow">http://blog.360.yahoo.com/blog-FDuiCSg4eqinB8z.GGJ7TmAz?p=89</a>

ian
Posted by irogers (3 comments )
Reply Link Flag
Confessions?
Thanks for the c:\yahoo\company\blog\spam.doc Mr. "Enginner"
lol
Posted by Terry Murphy (82 comments )
Link Flag
Confessions of a Y! Music Engine Engineer
For some of the human aspects behind this product, feel free to visit my weblog. I was on the team that built this product.

<a class="jive-link-external" href="http://blog.360.yahoo.com/blog-FDuiCSg4eqinB8z.GGJ7TmAz?p=89" target="_newWindow">http://blog.360.yahoo.com/blog-FDuiCSg4eqinB8z.GGJ7TmAz?p=89</a>

ian
Posted by irogers (3 comments )
Reply Link Flag
Confessions?
Thanks for the c:\yahoo\company\blog\spam.doc Mr. "Enginner"
lol
Posted by Terry Murphy (82 comments )
Link Flag
What's uncool is that only annointed people can comment on the blog
When I tried to post a question, I got:

"You must be a member of Yahoo! 360° to comment on this blog entry."

When I tried to join, I got:

"Thank you for your interest in Yahoo! 360°. Currently, you must receive an invitation in order to use this service."

Despite the sincerity of the blog, I fear that this product launch is hype.

For example, I prefer Sony MP3 players*. The Yahoo! Music Unlimited splash page claims, "Yahoo! Music Unlimited songs can be transferred to Plays-for-Sure subscription-compatible devices including Zen, Rio, SONY, Phillips, Dell and others". When I click "Play-for-sure devices" and do "Show All Devices", I get a list of mediocre* players from Creative and RCA. [http://It bugs me that I also have to add playsforsure.com to my Trusted Sites zone in Internet Explorer. The site requires cookies, JavaScript, and other intrusive crap just to display a list of MP3 players.|http://It bugs me that I also have to add playsforsure.com to my Trusted Sites zone in Internet Explorer. The site requires cookies, JavaScript, and other intrusive crap just to display a list of MP3 players.]

I wanted to discover the truth about player compatibility by asking an expert via the blog, but I can't. Oh well!

Paul Marcelin-Sampson
Santa Cruz, California

* Please, no flames: My 1 GB Sony NW-E99 gets 70 hours of play on one AAA battery when playing ATRAC3 files, or 50 hours when playing standard MP3 files. Creative, RCA, and other competitors don't come close. And I can supply my own AAA rechargeable or, in a pinch, pop in a battery from the corner store. Try that with any iPod!
Posted by rpms (96 comments )
Reply Link Flag
What's uncool is that only annointed people can comment on the blog
When I tried to post a question, I got:

"You must be a member of Yahoo! 360° to comment on this blog entry."

When I tried to join, I got:

"Thank you for your interest in Yahoo! 360°. Currently, you must receive an invitation in order to use this service."

Despite the sincerity of the blog, I fear that this product launch is hype.

For example, I prefer Sony MP3 players*. The Yahoo! Music Unlimited splash page claims, "Yahoo! Music Unlimited songs can be transferred to Plays-for-Sure subscription-compatible devices including Zen, Rio, SONY, Phillips, Dell and others". When I click "Play-for-sure devices" and do "Show All Devices", I get a list of mediocre* players from Creative and RCA. [http://It bugs me that I also have to add playsforsure.com to my Trusted Sites zone in Internet Explorer. The site requires cookies, JavaScript, and other intrusive crap just to display a list of MP3 players.|http://It bugs me that I also have to add playsforsure.com to my Trusted Sites zone in Internet Explorer. The site requires cookies, JavaScript, and other intrusive crap just to display a list of MP3 players.]

I wanted to discover the truth about player compatibility by asking an expert via the blog, but I can't. Oh well!

Paul Marcelin-Sampson
Santa Cruz, California

* Please, no flames: My 1 GB Sony NW-E99 gets 70 hours of play on one AAA battery when playing ATRAC3 files, or 50 hours when playing standard MP3 files. Creative, RCA, and other competitors don't come close. And I can supply my own AAA rechargeable or, in a pinch, pop in a battery from the corner store. Try that with any iPod!
Posted by rpms (96 comments )
Reply Link Flag
 

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