Yahoo Raising Music Subscription Costs

Portal company Yahoo Inc. informed customers of its subscription music download service that it will increase pricing for users who transfer their tunes onto portable devices or CDs.

The Sunnyvale, Calif., firm forwarded an e-mail to its Yahoo Music Unlimited subscribers late Thursday telling customers that it plans to double the fee it charges for the so-called unlimited service from $4.99 per month to $9.99 per month for people who buy the service on an annual basis.

Yahoo said people who subscribe to the download service on a monthly basis will see their memberships increase from $6.99 per month to $11.99 per month.

Unlike subscribers to Apple Computer Inc.'s market leading iTunes music service, who pay 99 cents per song download and own the music forever thereafter, Yahoo's service more closely mimics the offerings of Napster LLC (search) and RealNetworks Inc. (search), which allow users to download as many songs as they wish for use on their computers, but levy additional fees for permanent ownership of the digital content.

In addition to the higher subscription fee, Yahoo charges subscribers 79 cents per download for music they want to keep for usage on a portable device or to burn onto CDs.

Yahoo claims that its service still represents the best deal on the market, while Napster charges a similar $9.95 per-month fee, plus 80 cents for each permanent download. Real's Rhapsody service costs $9.99 for downloads to computers, while its Rhapsody to Go package, which allows users to transfer content to mobile devices, retails for $14.95 per month.

Representatives at Yahoo did not immediately return calls seeking further comment on the pricing shift.

The company is offering existing customers of the Music Unlimited service the opportunity to lock in at the current subscription price of $59.88 for one more year. Customers who do not wish to transfer files to mobile devices will continue to pay only $6.99 per month for the service.

Web-based download pricing has come under increased scrutiny recently from leaders in the music industry who say that Apple's 99 cents per song payment plan won't generate sufficient income to cover recording companies' expenses for recruiting, signing and supporting artists.

At the CTIA Wireless IT and Entertainment Conference last month, Edgar Bronfman (search), the chief executive of Warner Music Group Corp., said in a keynote that more flexible pricing plans were needed to help defer the cost of recording and promoting performers.

However, Apple CEO Steve Jobs (search) has rebutted such observations, calling the recording industry "greedy" and warning that more consumers will resort to illegal file-sharing if companies raise their process significantly.

Another bone of contention in the download pricing debate is the lack of an industry-wide DRM (digital rights management (search)) standard, which sets the ground rules for the limitations of consumers' rights to copy and share the music they buy.

While Bronfman and others have stumped recently for a common DRM standard to be adopted by all companies offering downloads, many providers, including Apple, continue to maintain their own usage rules.

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