Low-cost Yahoo online music service could shake up sector

May 12, 2005

If you
didn't have enough choices where to buy your music online, the choice got one bigger. Yahoo has now entered the arena. To make a splash, they've cut prices on music downloads to half of what their competitors charge.

The
initial download per month price is only for a certain time period (the time period has not been verified as of yet). It appears the only reason that Yahoo is cutting prices for the new download service is to get more traffic through their search engine.

Yahoo on Tuesday said it was offering the new service allowing unlimited access to one million songs with some ability to transfer songs to portable devices for as little as 4.99 dollars per month during an initial period.

The move by Yahoo into the online music marketplace sent investors fleeing from shares of Napster -- whose shares fell almost 27 percent Wednesday -- and RealNetworks, down 21 percent.

Napster is trying to make money with a subscription service but Yahoo can say 'We don't really care if we make money.' The point is to generate more traffic with users and to sell advertising at pretty high margins," he said