February 6, 2008, 12:00 AM

Rhapsody to become Yahoo’s on-demand digital music service

Rhapsody America soon will be the exclusive on-demand music service for Yahoo, replacing Yahoo Music Unlimited. Under a broad strategic alliance Yahoo and Rhapsody also plan to collaborate on other digital music services such as music downloads.

In the next few months, Rhapsody America, the digital music service of RealNetworks Inc. and Viacom Inc.’s MTV Networks, will be the exclusive on-demand music service for Yahoo Inc. Rhapsody will replace Yahoo Music Unlimited, which launched in 2005. Under a broad strategic alliance Yahoo and Rhapsody say they also plan to collaborate on other digital music services such as music downloads. RealNetworks is No. 94 in the Internet Retailer Top 500 Guide.

The partnership introduces Rhapsody’s subscription music service to Yahoo Music’s online music audience. In the coming months, Yahoo Music Unlimited subscribers will be migrated to Rhapsody’s digital music service through a process that will convert those subscribers’ music libraries to Rhapsody. Current Yahoo Music subscribers will be able to maintain their existing pricing tiers for a limited time after migration to the Rhapsody service.

The partnership coincides with Yahoo’s acquisition of FoxyTunes, a company that developed a toolbar plug-in that enables digital music users to control more than 30 desktop and Web-based music players. FoxyTunes enables listeners to find lyrics, videos, bios and other information based on what is currently playing in a user’s media player.

“Our partnership with Rhapsody, the acquisition of FoxyTunes and the release of the web-based Yahoo Media Player moves Yahoo Music closer to our goal of enabling users to play all of the music on the web,” says Ian Rogers, vice president of video and media applications for Yahoo. “But, it doesn’t end there. Yahoo Music will continue to innovate and forge new ways to marry music content with the rich content of the Internet.”

Last Friday, Yahoo’s board said it would consider an unsolicited offer from Microsoft Corp. to acquire it in a deal valued at about $44.6 billion.

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