Rhapsody takes on iTunes

Digital music seller Rhapsody is going after Apple iTunes and has a whooping $50 million in its pocket to spend on ads.

Rhapsody scored a massive coupe when it signed a contract in February with Yahoo to provide all of its online music offerings, but now the company is going after its rival with downloads.

The songs will be sold in MP3 format, which means users of the Rhapsody service will be able to play them on iPods.

Before this, Rhapsody, which is jointly owned by Real Networks and Viacom's MTV Networks, had just provided a subscription service, which gave subscribers unlimited streaming for $13 to $15 a month.

But now Rhapsody has decided to start providing tunes for iPodders to take on Apple.

Rhapsody VP Neil Smith told Reuters: "We're no longer competing with the iPod. We're embracing it".

In another blow to iTunes, Rhapsody will also be providing the music download service for MTV's website as well as iLike, which is one of the most widely used music applications on social networking site Facebook.

And Rhapsody has signed a deal with telecoms company Verizon to provide music downloads for its subscribers in the States via the Verizon Wireless VCAST Music service.