Yahoo sells its music subscription service to Rhapsody America

After officially closing down its premium online music service Yahoo Unlimited, Internet powerhouse Yahoo! Inc. has decided to sell its digital music subscription service to Rhapsody America, a single, integrated online and mobile music platform.

Yahoo and RealNetworks, a creator of digital media services and software struck a strategic partnership yesterday, under which Yahoo will transfer all customers of its Yahoo! Music Unlimited subscription service to Rhapsody and in turn will promote Rhapsody's service on its Web site (music.yahoo.com).

Launched in December 2001, Rhapsody is a subscription-based online music service from RealNetworks that gives users unlimited access to a vast library of major and independent label music. Rhapsody was the first music service to offer streaming on-demand access to nearly its entire library of digital music.

Rhapsody America is a joint venture company owned by RealNetworks and Viacom unit MTV Networks, and was formed last year through the combination of Real's Rhapsody subscription service and MTV's Urge service.

Nearly 400,000 customers of the Yahoo Music Unlimited service will be migrated to Rhapsody, however, Yahoo Music, the most-visited online music site with 20 million monthly visitors, will continue to offer music videos, Internet radio and music downloads.

"People want to have music and consume it in lots of different forms and across different devices and platforms and we want to have a play in as many of those as we can," said Scott Moore, Yahoo's head of media.

"They are our subscription partner going forward and there's money to be made for both of us in that," Moore added.

The shift of subscribers to the Rhapsody service will happen sometime in the first half of this year.

Financial terms of the deal have not been disclosed by either company. The Internet pioneer expects the deal to close by the middle of year.

Yahoo's subscription rates range from $5.99 a month, if users pay for a full year in advance, or $8.99 a month. Membership of Rhapsody, which has 2.75 million subscribers worldwide, starts at $12.99 a month.

The Yahoo-Rhapsody partnership was announced after Microsoft Corp made a $44.6 billion bid on Friday to acquire Sunnyvale, Calif.-basedYahoo.