Yahoo, Inc. (NASDAQ: YHOO), which is going to have an interesting week after last week's unsolicited bid by Microsoft Corp. (NASDAQ: MSFT), is outsourcing its online music business. Instead of operating its own music download service (which apparently has not been very profitable), the company will give that chore to Rhapsody America, operated by RealNetworks, Inc. (NASDAQ: RNWK) and Viacom, Inc. (NYSE: VIA).

Yahoo! will migrate customers of its in-house music subscription service to Rhapsody in the coming months. With RealNetworks and potential Yahoo! owner Microsoft being bitter enemies, it will be interesting to see if this partnership lasts should Microsoft succeed in taking ownership of Yahoo for $44.6 billion.

Does Yahoo! have the chops to do much outside the email, search and display advertising arenas? It has not seen growing profit despite being the world's largest internet property (until recently), but shedding itself of assets like its online music business is in line with the company's recent turns as it concentrates on core businesses and trying to be everything to everyone -- and making money from just a few pieces of its business.

Yahoo Inc. (NASDAQ: YHOO) may be interested in offering a music download service that is free of digital rights management (DRM), similar to Apple Inc. (NASDAQ: AAPL)'s iTunes plus and Amazon.com (NASDAQ: AMZN)'s music download service. It's safe to say that the end is coming near for proprietary, restricted, protected music downloads that are incompatible between different types of music players and music download services.

The only problem is that Yahoo! did not started the initiative earlier and has left the competition to take the initial market share pie of music download lovers who want music free of use restriction. It's not that Yahoo! made a bad choice here; it's jumped on the bandwagon with every other music download provider. It's just that it may be too late for it to take any significant market share, unless it offers something compelling the competitors don't.

Yahoo! has apparently been talking to large music labels such as Universal Music Group, Sony BMG Music Entertainment, Warner Music Group Corp. and EMI Group to allow music from all those global catalogs to be available on the new service (rumored to be out sometime this year).

In terms of strategy, this makes sense for Yahoo! The company, which has failed with many of its paid subscription offerings in recent years, will most likely supply advertising in some form with this new service to grab the revenue it hasn't been able to make headily with its monthly paid music subscription model. Just don't look for unprotected MP3s to become a core component of Yahoo!'s revenue any time soon.