Yahoo shutters music service, allies with Rhapsody

The search provider has decided to end its music service, opting instead to send its business to Real.

In a joint statement this morning, Rhapsody -- the joint venture from RealNetworks and MTV -- revealed that, over the coming months, Yahoo will transition its customers over to Rhapsody by offering tools to convert their library from one format to the other.

"There goes another online music effort," JupiterResearch analyst Michael Gartenberg said. "Good news for Real. Of course, it will be interesting to hear what the folks in Redmond have to say about this."

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One issue that consumers will run into is the change in pricing structure. Yahoo Music Unlimited charged either $5.99 per month for an annual subscription or $8.99 per month for monthly billing. Rhapsody currently charges $12.99 per month, or $14.99 per month for the ability to download songs to a player, so in some cases users could be facing a doubling of their monthly fee.

In an attempt to alleviate any problems, Real said that it would honor Yahoo's old pricing structure for a limited time. Final details are not yet known, although Yahoo said it would provide further details closer to when it's ready to migrate customers.

"This agreement allows Yahoo to continue its focus on being the Internet's leading starting point by creating an indispensable music experience that will drive music fans to Yahoo first on their path to music discovery," Yahoo media chief Scott Moore said in a statement.

It wouldn't be the first time Rhapsody has benefitted from the shuttering of a competitor. In November 2006, MSN closed its own music store, opting to allow those wishing to purchase tracks to either select between Zune or Rhapsody.

In related news, Yahoo also announced that it had acquired Israeli-based FoxyTunes, makers of a Firefox and IE extension that allows users to search for online music and lyrics, as well as control their media players from the browser.

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