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Yahoo's foray into online music stings Napster, RealNetworks

SAN FRANCISCO -- Yahoo Inc.'s steeply discounted foray into online music subscriptions struck a sour note yesterday with shareholders of Napster Inc. and RealNetworks Inc. -- rivals that stand to lose the most from the new competitive threat.

Napster's shares plunged $1.70, or 26.8 percent, to $4.65. RealNetworks' shares fell $1.54, or 21.1 percent, to $5.76.

Yahoo's entrance into the music downloading business even hurt Apple Computer Inc., which runs the dominant online music store, with more than 400 million songs sold since it opened two years ago. Apple's shares fell 81 cents, or 2.2 percent, to $35.61, even though analysts say the company is far less vulnerable.

Yahoo's shares gained 82 cents, or 2.4 percent, to $34.88.

Napster chairman Chris Gorog sought to reassure investors and subscribers as $61 million of his company's market value evaporated yesterday.

''We believe we will continue to compete very successfully against any new entrants," he said, also predicting Yahoo would raise its prices, echoing the sentiment of many industry analysts.

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