Rhapsody, the online music provider, is challenging iTunes’ supremacy this week by launching a new selection of songs in MP3 format. Buyers should be happy to know they are compatible with their iPods.

Online music services have been fighting for the number one spot, but none of them has ever managed to rival the iTunes.

This time, Rhapsody is going for more than the average online music store, by offering unprotected MP3 tunes, which are compatible with Apple’s iPods.

Rhapsody used to have a subscription service that allowed unlimited song streaming for less than $15 a month, but as Rhapsody vice president Neil Smith told Reuters, they “are no longer competing with the iPod,” but rather embracing it.

At the same time, Verizon Wireless has announced its plans to sell DRM-free music, together with a new subscription service, all powered by Rhapsody.

The service will be available for both subscribers and non-subscribers, who will be able to purchase $0.99 tunes and download them to their PCs, and sync the with any MP3-compatible device.

The VCast music store is thus joining other big names in selling DRM-free music from all the major record labels, such as Sony BMG, EMI, Warner Music and Universal Music.

The Digital Rights Management schemes (DRM) limit how many times users can copy their music and which devices can play them. Music companies have started experimenting with allowing retailers to sell DRM-free music in order to stop illegal sharing of music.

Amazon already embraced the DRM-free alternative and started offering through its Amazon MP3 store a wide selection of downloadable tunes. Other retailers began following their example as well.

The question that still remains is: will more DRM-free music stores help Verizon, Rhapsody, Amazon and others end the iTunes supremacy? So far, Apple’s online music store is far ahead, with an overwhelming market share, but who knows, things might change…