Yahoo has announced plans to shut down their premium music service. The subscription based music service built on Microsoft’s “Play For Sure” technology has been a long time competitor to the likes of Real’s Rhapsody. The service is scheduled to shut down tomorrow and users are to be shifted over to Rhapsody with the current Yahoo pricing (currently as high as $8.99) to stick for a limited time before being upped to Rhapsody’s $12.99 pricing.

But what does this mean? Well, for one thing, a lot of retailers are moving away from stand alone efforts and focusing more on partnerships. This is due largely to Apple’s iTunes store maintaining a dominant position on the digital download market. However, with Amazon’s Mp3 store being entirely DRM-free, I expect that we will see more people move towards deals with Amazon in order to offer the consumer friendly DRM-free solution. I expect that as Amazon’s Mp3 store becomes more popular (an almost certainty with their Amazon/Pepsi Super Bowl promotion), we will see the two top music download stores become Amazon & iTunes. I think that this has a lot of companies offering digital music download solutions running scared. The thing that interests me though, is if Amazon can use this Pepsi promotion (similar to the one iTunes had a couple of years ago) to increase their popularity. Once customers know that tracks purchased from Amazon can be played on any portable media player, I think that the Amazon Mp3 store will see a dramatic increase in their customer numbers. The Pepsi partnership is a great way to do that (look at how well it did for iTunes a couple of years ago).

Some bloggers out there (TechCrunch is one of them) are suggesting that if Yahoo is in fact purchased by Microsoft, that the customers looking into Yahoo’s music services could be redirected to Microsoft’s Zune Marketplace, the Microsoft run media store for Zune users. I think that this is a possibility should the Microsoft/Yahoo deal become a real thing, but as it stands right now it is nothing more than a letter from Steve Ballmer to Yahoo’s board. Until Yahoo says yes, Yahoo shutting down their music service is nothing more than Yahoo attempting to reduce its expenses in what is looking to be a troubled time for them.