iTunes appears a bit cornered these days, as new rivals appear is all shapes and sizes: Nokia is expanding its music deal with the biggest music labels in the business, Rhapsody is joining hands with Verizon, Napster will start selling 99 cents DRM-free tracks and so on.

This week was Rhapsody’s turn to send a message to Apple with its latest initiative, “Music Without Limits,” a new music service that offers MP3 tracks for 99 cents in DRM-free format. But things go further than that, as Rhapsody decided to invade the sacred territory of the iPod, and make all tracks compatible with Apple devices.

Rhapsody’s strategy is best described as “fighting fire with fire,” as there will be no copy restrictions and no iPod compatibility issues for the MP3 tracks. As Neil Smith, vice president of Rhapsody, explained, they are no longer competing with the iPod, but rather embracing it.

The previous service offered by Rhapsody, which is a joint venture between RealNetwoks and Viacom’s MTV Networks, included unlimited song streaming for $15 a month. However, now that the iTunes Music Store reached the 5 billion download landmark, Rhapsody’s strategy changed.

The new service is likely to satisfy all customers who like to own the music they’ve purchased and want to have the freedom to play it on whatever device they wish, with no restrictions.

Beyond the iPod compatibility, Rhapsody also announced a deal with Verizon Wireless to support the carrier’s VCast Music service, by offering customers the possibility to download and play the music they’ve purchased on their mobile device on any other device.

By constantly refreshing their iPod line, and offering one quarter of its music library as DRM-free tracks, Apple managed to not only keep up with competitors, but form a league of its own when it comes to selling music.

Apple has placed an undisputed mark over the music market in the past few years. What everyone is waiting for right now is a rival to live up to all expectations and tell Apple there’s a new rival in town.

Although Apple’s iTunes Store has kept a strong position on the market, and it continues to lead the industry with over 70 percent market share, the competition won’t just sit and wait. By the end of the year, customers can expect some changes and more alternatives in the musical landscape.