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View Full Version : Yahoo to Launch Own Music Service, Despite Musicmatch Purchase


Jason Dunn
09-20-2004, 06:34 AM
<div class='os_post_top_link'><a href='http://news.com.com/Yahoo+to+launch+its+own+music+player/2100-1027_3-5372075.html?part=rss&tag=5372075&subj=news.1027.5' target='_blank'>http://news.com.com/Yahoo+to+launch+its+own+music+player/2100-1027_3-5372075.html?part=rss&tag=5372075&subj=news.1027.5</a><br /><br /></div><i>"Web portal Yahoo is planning to launch its own online music service later this year, despite its $160 million purchase of Musicmatch announced this week, according to music industry sources. Since late last year, Yahoo has been developing its own music player software, which will be underpinned by a subscription and download service provided by MusicNet, sources familiar with the plan said. Yahoo still plans to launch that home-built package by the fourth quarter of this year, despite its recent purchase of Musicmatch, those sources said. The Web giant is likely to run the two services side by side for some time before ultimately drawing on Musicmatch's technology and moving Musicmatch's subscribers into the Yahoo fold, sources said."</i><br /><br />Classic marketing strategy: have two different products "compete" with each other, but in reality, you own both and profit no matter which one the customer buys. Just look at the number of different types of Crest toothpaste on the store shelf for this tactic in action.

Felix Torres
09-20-2004, 02:15 PM
Interesting metric in there on the number of unique users of the various services.
Kinda puts a context on PC-based digital music.

With 14 million (non-subscription) customers on Launchcast, Yahoo has a pretty good idea of what plays and doesn't play with customers and a pretty fat target to aim their fee-based download and subscription services to. If they get just 5% of the Launch customers to sign up, they'll be right up there with Napster in users and Apple in revenue...
At 10% conversion, they'll be dusting Apple in music revenue...
($251 million gross and $100 net profit per year; easy to see why they want in on this business.

I'm thinking those fat-n-juicy digital music profit margins are going to start shrinking real-soon-now, though...

Jason Kravitz
09-20-2004, 08:11 PM
I don't know about marketing strategy - at least Crest has different varieties so it is not exactly competing with itself... they are just offering the user a choice between complimentary products.

What Yahoo is doing is a corporate redundancy - they are supporting two different technologies and paying engineers and managers to run both.

It also sends a conflicting message to users - are they that loyal on the yahoo or music match brand name that they need to maintain both?

In the end it is a matter of convenience - if the same song costs the same money at different stores than the user will buy based on the ease of getting the song to their media player or device which is where apple and microsoft win out.

Either way, Apple has carved out a space that is about to get a lot more crowded!