Wednesday, May 11, 2005

In an aggressive attempt to broaden the online-music business, Yahoo Inc. today plans to roll out a new low-priced service that allows listeners to rent songs rather than buy them outright.

The service, dubbed Yahoo Music Unlimited, will give music fans unlimited access to more than a million songs from artists including Bruce Springsteen, Gwen Stefani and 50 Cent, for $6.99 a month. Yahoo also will offer an annual subscription for $60 -- about the cost of four or five CDs. Songs become unplayable when consumers let their subscriptions expire. The service, which lets users transfer the songs to select portable MP3-format music players, is priced far below major rivals' services: RealNetworks Inc., for example, charges $179 a year for its comparable subscription service.

Yahoo's $6.99-a-month service has the potential to change the music-buying calculus for consumers.

Beyond pricing, Yahoo is giving users extensive ability to share their music. Yahoo says its service, which includes free software similar to Apple's iTunes jukebox, will allow subscribers to see what songs friends have on their computers, and listen to their friends' tracks if the tracks are part of Yahoo's catalog. Rival services let users share music play lists, but individuals can't always hear the songs unless they own them.

While Yahoo's service sets a new floor for online music pricing, some record executives say they aren't concerned about the low price. It is "a good thing for artists, a good thing for music, and a good experience for consumers," says Ted Cohen, senior vice president of digital development and distribution for EMI Music, a unit of the U.K.'s EMI Group PLC.

Yahoo's subscription service works with about 10 different portable MP3 players, all of which use Microsoft Corp.'s digital-music format. They include Dell Inc.'s DJ players and Creative Technology Ltd.'s Zen Micro. The subscription service doesn't work with Apple's iPod, by far the top-selling digital-music player.