• by Gavin O'Malley  @mp_gavin, May 11, 2005

The digital downloading space was thrown for a loop Tuesday when Yahoo! revealed plans to launch an online music subscription service. Cast as a competitively low-cost way for users to rent music files, starting today Yahoo! Music Unlimited will give individuals unlimited access to a catalog of more than a million songs, which they may transfer to their portable MP3 players and share with friends through Yahoo! Messenger.

The cost of the service--$6.99 per month, or $60 per year--is much cheaper than the cost of rivals' services. RealNetworks Inc. charges $179 a year for a similar subscription service; Napster charges $14.95 per month for a subscription service that works with a portable player, and $9.95 per month without the portability option.

Subscribers can play downloaded music as long as they keep paying for Yahoo!'s service. When users stop paying, the songs become unplayable.

Apple's iTunes charges users by the individual song or album, and doesn't offer subscriptions. Yahoo! Music users will also be able to buy songs under the standard download model for a cost of 79 cents for Music Unlimited subscribers and 99 cents for non-subscribers.

Yahoo! said its service will allow subscribers to view the song lists on friends' computers, and listen to the lists as long as the songs are part of Yahoo's broad catalog.

Last year, Yahoo! spent $160 million to grab MusicMatch Inc., which offers downloads and a non-portable subscription service. Yahoo! said it plans to lower the price of MusicMatch's subscription service to match its new offering, and also plans to merge the two services at some point in the future.