Yahoo Inc. said on Monday it will stop operating its online music service Yahoo Music and divert its customers to Rhapsody music service, which is run by RealNetworks Inc and Viacom Inc, in a deal that will allow Yahoo to promote Rhapsody on its site.
Yahoo said it will transfer its customers to Rhapsody in the coming months and allow its subscribers to access their music library from a new Rhapsody account.
The move came shortly after Microsoft Corp made a $44.6 billion bid to take over Yahoo.
There are still concerns about the progress of RealNetworks and yahoo partnership deal since the take-over of Yahoo by Microsoft may change the whole scheduled plan.
In October 2005, Microsoft and RealNetworks settled an eight-year bitter anti-trust dispute in which Microsoft agreed to pay $761 million to RealNetworks.
The founder and chief executive for RealNetworks was a former executive for Microsoft.
Once Microsoft takes over Yahoo, the Rhapsody music deal may be in vain since Microsoft already has a wide range of digital media products and services including an online music store and the new Zune digital media players.
However, there was some hope of success for the Yahoo-Rhapsody music deal when RealNetworks senior vice president, Dan Sheeran, said any conflicts with Microsoft were two years old and that both companies would proceed with their agreement.
Yahoo increased its value and competitiveness in the market when it said it acquired FoxyTunes, a company that developed a toolbar plug-in application that enables users to control more than 30 desktop and Web-based music players.