With the move, Apple faces yet another competitor poised to cut into its iTunes sales. Most Apple tracks come wrapped in Fairplay, a digital rights management program that makes it very difficult for people to transfer them to portable devices other than iPods.
EMI is the only major label that allows Apple's iTunes to sell tracks in MP3 format. But all four of the major labels are willing to allow Rhapsody to sell MP3 tracks, which will be priced the same as Apple's 99 cents a song or $9.99 an album.
Rhapsody also will allow users to listen to up to 25 tracks a month in their entirety before deciding whether to purchase them. That, combined with the lack of DRM, seems to give Rhapsody a big advantage over Apple. At the same time, Amazon sells DRM-free tracks for just 89 cents a song. Rhapsody might have to do more than just offer a few dozen free tracks a month to compete with Amazon's lower prices.
Despite the emergence of iTunes competitors, no one should write off Apple just yet. The company still has huge brand recognition, is easy to use and, most importantly, offers more songs than its rivals. At last count, iTunes' catalog had more than 8 million tracks -- almost twice as many as Rhapsody's 5 million. Amazon also offers around 5 million tracks, while Napster has around 6 million.