“Yahoo, rethinking earlier plans, is quietly exploring ways to develop a music download service as archrivals Microsoft and America Online place bigger bets on digital song sales,” Jim Hu and John Borland report for CNET News.com. “According to knowledgeable sources, Yahoo bought music software developer Mediacode in December to help create a digital jukebox and media player–the key components in many music download services. The Mediacode team includes two founding members of Nullsoft, which created the popular Winamp music player and is now owned by AOL.”
“In addition, Yahoo also has begun kicking the tires of online music services as it rethinks its strategy, which hinges on streaming media, not downloads. For example, Yahoo has held discussions with Musicmatch, one of the largest Internet music services, in what could be a prelude to acquisition talks, according to sources familiar with the meetings,” Hu and Borland report.
“Few analysts expect music downloads to make money anytime soon. Apple Computer, whose iTunes Music Store dominates the market, makes its money on the sale of companion iPod music players and concedes the service is not yet profitable,’ Hu and Borland report. “Still, many large companies, including Microsoft and Coca-Cola, now have plans to offer music downloads. America Online has also joined the game, taking a shortcut by bundling Apple’s iTunes store with its online service. Even RealNetworks, which has bet on subscriptions through its Rhapsody product, recently launched a retail song store.”
“In October, Apple dropped Musicmatch as its software provider for Windows iPod owners, opting to create its own application instead. Since then, Hewlett-Packard also dropped Musicmatch and decided to bundle iTunes with its computers,” Hu and Borland report.
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