Yahoo's Music Store Undercuts The Entire Market

As expected, Yahoo is unveiling its music subscription service today. What is unexpected is the price. As reported practically everywhere, Yahoo will release today Yahoo Music Unlimited, which charges just $60 a year for unlimited access to over 1,000,000 songs from all four major record labels and many independents, plus transfer those songs to portable players.

By comparison, most music stores charge 99 cents for a single song, and most subscription services charge $15 a month, which can add up to $180 a year. Yahoo is charging exactly a third of what Napster To Go charges for portability, and exactly half of Napster's non-portable music service. If you pay for the whole year up front, it comes out to a measly $5 a month, and it doesn't charge extra for portability like others, despite using the exact same technology Napster and RealNetworks use, Microsoft's Janus technology.

Yahoo will also be leveraging the power of its other services. Yahoo Instant Messenger users will be able to browse playslists and listen to songs on other YIM user's computers, so long as both users as subscribers. Yahoo's current music services, including Launchcast, attract 25 million users a month, a considerably large userbase it can attract.

Subscribers to Yahoo Music Unlimited get free Launchcast Plus. This is a huge selling point for fans of the service, as I know from using and loving Launchcast. Since Launchcast Plus is $35 a year, using Yahoo Music Unlimited adds just $25 a year, a price so absurdly low that most Launcast Plus users might subscribe just for the hell of it. Others, like myself, who have held off on Launchcast Plus subscriptions, might see this as the killer deal that gets them to sign up.

Yahoo's pricing has so undercut the entire market it is being reported as "immediately mak[ing] it a serious player". While the pricing is so dramatic as to overshadow any other news about the service, it will still be interesting to see the reaction to the full product. What will people think of the new Yahoo Music Engine, which powers the whole service?

Since Janus-compatible players have not penetrated the market much, it will take time for Yahoo, even if successful, to start making serious dents in iTunes' bottom line. When consumers start relizing that legal music costs so much more money on an iPod, we may see sales of Janus players skyrocket, no matter how much better Apple's players are. That, or the market is so blinded by the glitz of the iPod, it will refuse to even consider alternatives. We'll just have to wait and see. Still, a very bold move by Yahoo.

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