Internet portal Yahoo is expected to officially launch a beta of its new music service today. At the heart of it will be Yahoo! Music Unlimited, a subscription service similar to Napster To Go and RealNetworks’ Rhapsody-To-Go service, but much less expensive. Subscriptions start at US$4.99 per month if you pay for a year upfront, and US$6.99 per month if billed monthly. When compared to the alternatives from Napster and RealNetworks at about US$15.00 per month, it’s a very attractive point, albeit for a music rental service.

Like other the subscription services, Yahoo! Music Unlimited uses Microsoft’s Janus digital rights management technology to enable users to copy tracks to supported digital music players as well as listen to them on a Windows PC (no Mac or Linux support). Being able to burn a song to CD will require the purchase of the track for US$0.79 for subscribers. Nonsubscribers pay the industry-standard US$0.99.

Yahoo is also introducing the Yahoo! Music Engine, a digital music player with some interesting features. Foremost is the ability — when combined with a Yahoo! Music Unlimited subscription — to listen to music from the libraries of other users over Yahoo! Messenger. Users will also be able to share playlists. If the new service attracts enough users, the song sharing feature should be a key differentiator for Yahoo.

With the launch of a new music service come the inevitable comparisons to iTunes Music Store. Yahoo! Music Unlimited will face the same challenge that all of Apple’s other competitors (with the exception of RealNetworks when Harmony is working) face: no support for the iPod. With Apple apparently controlling nearly 60 percent of the US flash-based player market and selling over 90 percent of hard-drive-based digital music players while holding on to its market share lead (over 70 percent) with iTMS, Yahoo has its work cut out for it. However, the aggressive pricing will likely attract a fair share of users, and unless Napster and RealNetworks drop their prices (which might be difficult for them to do while turning a profit), Yahoo should also see a significant number of switchers from competing subscription services. (Share prices for Napster and RealNetworks are taking a beating today.) If it really takes off, it could also force Apple into the subscription business.

Yahoo’s press release is available here.