Yahoo Sells Premium Music Service To RhapsodyAmerica; Buys FoxyTunes

imageYahoo (NSDQ: YHOO), which has officially closed down its premium online music service Yahoo Unlimited (we reported on it first here), has sold the service to RealNetworks (NSDQ: RNWK) and MTV JV company Rhapsody America, and will now direct its (probably small number of) customers to Rhapsody music service. Financial details were undisclosed. As part of the deal, Yahoo will promote Rhapsody on its site. The shift of subscribers will happen sometime in the first half of this year, reports AP.

Of course, if the Microsoft (NSDQ: MSFT) buyout happens, this may change again with Zune’s music service…there may be a change-of-control out-clause in this music deal. Or that Microsoft-Yahoo won’t care and start all over again. More after the jump..

Yahoo will now focus on ad-supported streaming music and music videos, though there have been reports on Yahoo working on a DRM-free MP3 music store.

Yahoo subscribers’ music library and payment plans will remain the same for a limited time after the switch, but those wishing to remain on Rhapsody eventually will be required to sign up at Rhapsody’s rates, which are higher. Yahoo’s price was between $5.99 to $8.99 per month; Rhapsody’s price is $12.99 per month.

This comes after we reported Friday that RealNetworks has done about 10 layoffs in its music service, as it gets ready to launch its JV music service with MTV later this year. RealNetworks has 2.75 million subscribers to various music services, including Rhapsody and its online radio service.

Amidst all this change, it has still managed to do a small acquisition, something rumored before: it has bought FoxyTunes, a browser plug-in for Firefox and IE that has features such as online music and lyrics search, and also lets users control their media player from within the browser. The parent of the plug-in is based in Israel.