Starting yesterday, Napster officially began merging with Rhapsody, the largest on-demand music service in the United States. Back in October, Best Buy, the parent company of Napster, agreed to sale to Rhapsody for an undisclosed amount of money.

“This deal will further extend Rhapsody’s lead over our competitors in the growing on-demand music market,” said Jon Irwin, president, Rhapsody. “There’s substantial value in bringing Napster’s subscribers and robust IP portfolio to Rhapsody as we execute on our strategy to expand our business via direct acquisition of members and distribution deals.”

Combining the subscriber bases of the two largest on-demand music services will allow Rhapsody to further enhance it’s offerings, and try their damnedest to stay ahead of Spotify (where Napster co-founder, Sean Parker, is a major investor). According to Adam Parness, the senior director of music licensing for Rhapsody, they’ve seen an increase in subscriptions for the service since Spotify came state side. “We have seen tremendous growth since spotify came onto U.S. soil,” he said. “It validates our model.”

It’s unclear how many subscribers Rhapsody gained, seeing how the merger is now complete.

What are some of your memories of Napster? Will it be remembered fondly? Let us know your thoughts in the comment area below.

As a result of the acquisition, Rhapsody will simply add the Naspter subscriber base to its own for one combined subscriber base. Here are some statements the company released:

“This deal will further extend Rhapsody’s lead over our competitors in the growing on-demand music market,” said Jon Irwin, president, Rhapsody. “There’s substantial value in bringing Napster’s subscribers and robust IP portfolio to Rhapsody as we execute on our strategy to expand our business via direct acquisition of members and distribution deals.”

“This is a ‘go big or go home’ business, so our focus is on sustainably growing the company,” said Irwin. “We’re excited to welcome Napster music fans to the best on-demand music experience anywhere.  Our new members will have more places to connect to the music they love and to discover new favorites, guided by Rhapsody’s rockstar editorial team and the tastes of other Rhapsody members via our innovative social features.”

The deal is expected to close at the end of November.

While Napster might not get the attention it once did, there’s no question that it had an incredible impact on the music industry and how people find music online.

The second service to launch with invites was overseas streaming music service Spotify. The long-awaited U.S. release was met with excitement from the internet community. Basically, the desktop client allows users to stream millions of tracks for free, on demand. You can check a more in-depth run-through of the service here.

And now, less than a month after debuting in the States, Spotify looks to be expanding its subscriber base at a pretty quick clip.

According to All Things D and their “source familiar with the company’s operations,” Spotify has 1.4 million U.S. users enrolled in the free trial. Even more importantly, they already have 175,000 subscribers who have opted for the paid plans.

The paid plans allow for offline music, unlimited play, and mobile capabilities. The most expensive paid plan is $10.

This makes a conversion rate from free trail to paid subscribers of 12.5%, which is just a little below the 15% rate that Spotify said they had in Europe last year. Spotify has at least 1.6 million paid users in Europe. It’s unsure whether U.S. paid subscriptions will ever reach such a large number. Not only does the U.S. version of Spotify sport a larger music library with its free service, but the competition is strong in the States

Just to name a few you have Last.fm, Grooveshark, satellite radio like Sirius and Rhapsody.

But to put it in perspective, Rhapsody has 800,000 paid subscribers. They have been around for almost a decade.

They hope that by bundling the service with other amenities like cable TV and high-speed internet, fans will be more prone to accept an extra charge of $10 on their monthly bills for music, as opposed to paying for it separately.

To put Rhapsody’s subscriber numbers into context, it’s worth noting that Spotify is reported to have over 750,000 paying users too. If Spotify comes stateside in 2011, they will be a direct competitor to Rhapsody, as well as, everyone else.

"In 2011, someone will become the Apple of streaming — perhaps Apple itself. Consumers are getting closer and closer to accepting renting over owning content," Jason Feinberg writes. "Companies such as MOG, Rdio, Spotify, and Rhapsody are poised to capitalize on this. With good timing, savvy marketing, and clear messaging that succinctly communicates the benefits, a streaming music provider can easily take the leading role in this race."

It looks like Rhapsody has a running start, but Spotify or Apple could catch up.

Originally published at hypebot.com

Rhapsody says it is the first U.S. service to allow people to download subscription music to the iPhone. By downloading playlists directly to the device, users can listen to Rhapsody from any location.

"Today marks a turning point for Rhapsody and subscription music," said Jon Irwin, Rhapsody’s president.

"By making Rhapsody accessible anywhere people want to hear music — and not just the places where they have an Internet connection — we’re giving music lovers a new way to discover and enjoy music on the devices they love."

Using the iPhone app requires a subscription to Rhapsody for either $10-per-month, which provides access to the music service on one mobile device or for $14.99 which provides access on up to 3 mobile devices.

Earlier this month, the company launched a mobile app for the Android platform. Rhapsody said it is developing a new mobile app for BlackBerry users that will launch this summer.
 

1. THEY CAN’T -  Some labels hate Steve Jobs so much that they want to give competitors the DRM free edge.
2. THEY DON’T HAVE TO – Sales at iTunes continue to grow.  Why make the switch?
3. THEY DO WANT TO -  Jobs wants to control to keep the Appple iPod iPhone iTunes ecosystem as closed as possible as long as possible. After all, it helps sell stuff.

Whatever the reason, it would seem that Apple is doing a disservice to its customers; though rising sales would suggest that they are satisfied. Why do you think iTunes has not gone DRM-free?

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The Yahoo Search music playback is powered by Rhapsody and offers full-song playback for more than 5 million tracks. Users will be able to listen to 25 free full-length songs every 30 days.

Once 25 songs have been played, users can subscribe to the Rhapsody Unlimited streaming service or listen to 30-second song samples until the next month begins.

When users click a play button in the search results Yahoo’s FoxyTunes Player will launch near the bottom of the browser window. The player offers full functionality for song playback, and includes an expandable playlist option.

Users can still browse their results page while the player is in use and search results will still scroll while the player remains in position at the bottom of the browser window.

"The launch of full-song playback in Yahoo! Search brings us closer to realizing Yahoo! Music’s vision of making the web playable and removing the barriers that prevent people from clicking play and hearing music," said Michael Spiegelman, head of Yahoo! Music.

"The powerful combination of Rhapsody and Yahoo!’s FoxyTunes Player will greatly enhance the discovery and consumption of music on the Web by giving online music fans what they want – an easy way to hear music."
 

There had to be a better way. It’s no surprise that Yahoo! Music is shutting down its download store and pointing customers to Rhapsody.  But did they have to pull a Microsoft and stop supporting the retrieval of license keys or authorize playback on additional computers? Here’s the email that came last night:

 

Greetings,

The Yahoo! Music Store, along with the ability to purchase and download single songs and albums, will no longer be available as of September 30, 2008.

Songs and albums that were purchased through the Yahoo! Music Unlimited Store…

The company now says it has 30 million registered users and will allow them to listen to entire songs rather than 30-second snippets. The full song streaming is via a partnership with Rhapsody.

iLike also announced an ad platform for concert promoters, artists and bands, that allows them to target users based on musical taste and location.

In addition developers will soon be able to add music to their Web sites via iLike. The company says it will launch this quarter and will enable developers to add song playback (songs and playlists) to their Web sites or Facebook applications. 

iLike says that its music applications have become popular on major social networks including Facebook, Orkut and hi5. Full song playback will soon be available on iLike’s music application on Facebook.

Users can listen to 25 full songs a month for free, at which time they will be asked to sign up for a Rhapsody account or listen to 30 second song samples. Artists and labels will be paid each time their music is played.

  "Historically, iLike has focused on serving fans, artists and labels. Today, we’re pleased to expand the iLike community by empowering two new groups: concert promoters and third-party  [application/website] developers," said Ali Partovi, CEO of iLike.

The MP3 tracks will be compatible with Apple’s iPod. Rhapsody vice president Neil Smith said that not being compatible with the iPod had limited Rhapsody’s reach. Previously the company had focused on its subscription service, which offered unlimited songs streaming for $13 to $15 a month.

Rhapsody will also be available on MTV’s music Web sites and iLike. The music service is one of the most popular applications on Facebook.

Rhapsody will be available on mobile phones through Verizon Wireless VCAST Music service. Any tracks purchased via VCAST will be able to be downloaded to the users computer.

Most albums will be available for $9.99 and single songs will sell for $.99. To promote the new MP3 service, Rhapsody is launching a "Music Without Limits" marketing campaign that includes broadcast, online and print advertising. The company said it will spend more than $50 million next year to promote the service and $15 million in the third quarter of this year.

Visitors to the Rhapsody MP3 store will be able to listen to full-length songs rather than just 30-second clips found on most sites before making a purchase.

The company says its MP3 catalogue will include more than 5 million songs from all four major music labels. The labels include Universal Music Group, Sony BMG, Warner Music, and EMI along with a number of independent labels.