Recs

3

Yahoo!'s Boo-hemian Rhapsody

By Rick Aristotle Munarriz | More Articles
February 4, 2008 | Comments (0)

Yahoo! (Nasdaq: YHOO  ) is finally facing the music. The company is in the process of shuttering its Yahoo! Music Unlimited service, according to PaidContent.org. It will send its current subscriber base and any future leads to Rhapsody America, the joint venture between RealNetworks' (Nasdaq: RNWK  ) Rhapsody and Viacom's (NYSE: VIA  ) MTV.

The handoff resembles Time Warner's (NYSE: TWX  ) turnover of its 350,000 AOL Music subscribers to Rhapsody rival Napster (Nasdaq: NAPS  ) last year.

Yahoo! Music Unlimited offers free Web-tethered access to a library of more than two million songs. Subscribers pay $8.99 a month, or $71.88 a year (which breaks down to $5.99 a month). Those rates will likely bump up to the higher rates of the more features-laden Rhapsody America service.

The failure of Yahoo! and AOL in this space should provide an important lesson. Catchall dot-com behemoths have a tough time competing against nimble niche players. AOL Music tried to stand out by offering videos, and failed. Yahoo! tried to stand out on price. That apparently didn't work out, either.

RealNetworks and Napster are the biggest fish in unlimited digital music offerings, but that's still a limited market. Apple (Nasdaq: AAPL  ) commands a larger audience for its a la carte digital downloads through iTunes.

The premium services also find themselves competing against everything from Internet radio to free, ad-supported streaming sites like CBS' (NYSE: CBS  ) Last.fm. That's before we even consider the plethora of unauthorized digital music providers.

In short, this is a dynamic sector, but let's not assume that Napster and RealNetworks will be the ultimate survivors. Napster has struggled to turn a profit. RealNetworks posted an operating loss in its most recent quarter. Both companies are blessed with cash-rich balance sheets, but one can't ignore the possibility that they, too, will one day hand off their fledgling services to someone else.

Listen in on this related Foolishness:

The Steve Jobs Betrayal
You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

Enter your email address below to find out what made Jobs so enraged!

Yahoo! is a former recommendation of the Motley Fool Stock Advisor newsletter. Time Warner is an active pick in the same newsletter. A free trial subscription is waiting with your name on it if you want to learn more. You, the newsletter, and time to read? Now that is a rocking good trio.

Longtime Fool contributor Rick Munarriz doesn't have the urge to sign up for a digital music subscription service, though he loves his music enough to subscribe to satellite radio. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

DocumentId: 569615, ~/Articles/ArticleHandler.aspx, 5/25/2012 5:39:41 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 12,454.83 -74.92 -0.60%
S&P 500 1,317.82 -2.86 -0.22%
NASD 2,837.53 -1.85 -0.07%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

5/25/2012 4:00 PM
RNWK $8.81 Up +0.19 +2.20%
RealNetworks, Inc. CAPS Rating: *
TWX $34.70 Up +0.12 +0.35%
Time Warner CAPS Rating: ***
VIA $52.16 Down -0.71 -1.34%
Viacom, Inc. CAPS Rating: ****
YHOO $15.36 Up +0.01 +0.07%
Yahoo! CAPS Rating: **
AAPL $562.29 Down -3.03 -0.54%
Apple CAPS Rating: ***
CBS $31.56 Down -0.07 -0.22%
CBS Corp CAPS Rating: ***
NAPS $2.64 Down +0.00 +0.00%
NAPSTER, INC. CAPS Rating: *

Advertisement