An excerpt from Marketwatch on their seemingly unsustainable pricing model...
However, one analyst questioned how Yahoo's new service could be profitable with such low prices. Mr Goldberg said the service would make money, although he did not rule out raising prices in the future.
PaidContent has an interesting audio interview with David Goldberg (SVP @ Yahoo). The audio quality is sketchy, but it is interesting. Their product focus is all about community, sharing and recommendations (with later reference to their plans to support numerous devices and documented APIs). With respect to pricing, he says that they are like Starbucks in that "they are not competing with other coffee shops, they are competing with people making coffee at home". Their target market is the (currently) non-paying digital music user, not necessarily iTunes or Napster consumers.
About the subscription model, his analogy is... "you don't own your television programming either but you still consume it". MusicNet is handling the backend with internally developed front-end.
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