Yahoo! Crashes Music Party

Online music players were hammered ahead of the bell Wednesday after Yahoo!(YHOO Quote) announced a beta version of a new rent-a-song service.

Yahoo! said its Music Unlimited service will start with an introductory price of just $4.99 a month for an annual subscription or $6.99 on a monthly basis. The service allows consumers to play tunes from a catalog of more than 1 million songs, transfer tracks to portable devices, as well as share music via Yahoo! Messenger.

"We are committed to being at the forefront of the rapidly growing online music segment," said Lloyd Braun, head of Yahoo! Media Group. "Yahoo! Music Unlimited draws on the best of Yahoo! to provide personalization and community features unlike anything else in the marketplace."

Yahoo!'s move to get a piece of the online music market dominated by Apple Computer(AAPL Quote) weighed on its new rivals' shares: Apple was off 3% in premarket Instinet trading.

Napster(NAPS Quote), meanwhile, tumbled 30% and RealNetworks(RNWK Quote) slumped 18%.

Shares of Yahoo! were up 19 cents to $34.25.