As first reported by CNET News.com, Yahoo had been quietly testing its media software to appeal to online music fans. The company has already launched Yahoo Music to aggregate music downloads. But results from Yahoo's music efforts have been mixed, as start-ups such as MP3.com and the controversial Napster file-swapping network have snowballed in popularity among Net users.
Today's software release, dubbed Yahoo Player, also comes as the portal continues discussions to acquire online music storage site Myplay. That deal may be in limbo because of Myplay's contractual tie-ins with America Online, according to sources familiar with the negotiations.
The media player market is dominated by RealNetworks, but it has become increasingly competitive as newcomers join long-time rivals such as Microsoft and Apple Computer. Yahoo's entrance into the fray may add confusion to the already crowded market, according to Eric Scheirer, an analyst at Forrester Research. As more Web companies adopt streaming strategies, numerous choices for media playback software may be too much for consumers.
"This is starting to become a headache for consumers," Scheirer said. "Different media players are battling for your desktop in the same way browsers were battling for your desktop."
Like Microsoft's and RealNetworks' latest product versions, Yahoo Player combines media player features with those found in "jukebox" applications for file storage and management. The new software streams audio and video feeds and plays music from CDs and files encoded in the popular MP3 format. Like RealPlayer 8, Yahoo Player includes Web browsing features.
The software was developed internally, but its skeleton is based on Microsoft's Windows Media technology. The software also requires people to have Windows Media Player and the Internet Explorer Web browser on their computers.
Yahoo's use of only Windows technology is potentially a coup for Microsoft. The software giant has wrestled for years with RealNetworks and has made inroads against its streaming rival, according to some studies. Some experts have paralleled Microsoft's situation with RealNetworks to its previous battle against Netscape Communications for Web browsing software. Getting its technology onto the desktops of Yahoo's enormous audience could benefit the software giant.
Yahoo said it has no time frame for when it will support RealNetworks' formats.
"We certainly want the ability to play RealNetworks formats and content," said Matt Rightmire, Yahoo's vice president of media properties. "Yahoo and RealNetworks are talking about things all the time--about a whole range of things--and this is one thing we have been (discussing) and continue to discuss."
Microsoft heralded the launch as another indication that adoption of its media technology is picking up steam. Kevin Unangst, group product manager for Microsoft's digital media division, said the licensing agreement between the companies does not preclude Yahoo from adding RealNetworks' streaming technology to its player.
"It's their application," Unangst said. "They're free to do what they want to do."
A RealNetworks representative pointed to the renegotiated contract with Yahoo as proof of a strong relationship between the companies. However, the representative declined to comment on whether RealNetworks' technology is slated to become a feature within Yahoo Player.
Nevertheless, Yahoo's connection with Windows may be significant given previous events. Last December, rumors swirled that Yahoo was considering dropping RealNetworks as its preferred technology in favor of Windows Media.
Sources at the time said Yahoo was considering creating its own streaming media player using Microsoft technology. Yahoo and RealNetworks eventually settled some of their differences and announced they would continue to work together.
For Yahoo, sole reliance on Windows technology is not new. In March, when the company released a beta version of financial information site FinanceVision, the product was launched as a Internet Explorer-only release. FinanceVision now has a Netscape version as well.
And when the company last year unveiled Yahoo Companion, a toolbar for Yahoo services, it again initially launched the product only for IE. The company later launched a Netscape-compatible version.
Meanwhile, its competitors have also taken steps to become major forces in online music. AOL and Lycos both acquired MP3 players: Winamp and Sonique, respectively. And AOL's pending merger with Time Warner is considered to be a major boon for the online giant's digital music strategy.
Yahoo's Rightmire welcomed the competition.
"Is it a crowded space? Sure it's a crowded space," he said. "The portal space has been crowded for five years, and we're not afraid of competing in crowded spaces."
News.com's Paul Festa contributed to this report.