In an unexpected move, Yahoo announced today a spin off of its two-year-old Yahoo Music Unlimited service. In a press release, Yahoo announced that Yahoo Music Unlimited will be replaced by Rhapsody, which will also become the exclusive on-demand music service for Yahoo.

As a part of the agreement, which was presented as a strategic partnership, the users of Yahoo Music Unlimited will be migrated to Rhapsody's digital music service in the next month. Because there is a significant price difference between the two services the former users of Yahoo Music Unlimited will maintain their pricing scheme for a while. The subscription to Yahoo Music Unlimited is $9 per month, while a month plan at RealNetworks' Rhapsody To Go costs $15)

The reasons behind Yahoo’s decision are unclear for the moment, but according to the rumors the Web company is preparing a free music download service.  

The great success iTunes has been enjoying, coupled with the music studios’ decision to renounce DRM, has lead to the emergence of a new business model: online distribution of digital music.

Last.fm, SpiralFrog and Imeem are only a few of the companies that have launched websites over the past six months where music is provided for free, either to be listened to or to be downloaded.

The new business model is generally quite simple. The website wishing to become a distributor signs a series of contracts with music studios, agreeing to give back part of the publicity revenues. In return, they provide users with albums and tracks that they no longer have to pay for.

The approaches are different though. Imeem for example allows its users to save tracks on personal web pages. Last.fm allows users to listen to one song three times, after which they are invited to purchase the track from iTunes or Amazon MP3.

"This agreement allows Yahoo! to continue its focus on being the Internet's leading starting point by creating an indispensable music experience that will drive music fans to Yahoo! first on their path to music discovery," said Scott Moore, Senior Vice President and Head of Media, Yahoo.

Though, the company has chosen a very bad moment to make the announcement. With Microsoft’s unfriendly take over bid on the table, the closing of the Yahoo Music Unlimited could be seen as a sign of weakness.