Yahoo! Music heads Dave Goldberg and Bob Roback, who came to Yahoo! when their seven year old startup Launch was acquired in 2001, have resigned from the company. ValleyWag had it first. We’re hearing rumors that Launch may now be up for sale.

Yahoo! Music has seen good traffic but download sales are believed to be disappointing.  Shedding the property could fit well with a larger strategy to solve “the peanut butter” problem.

As GM of Yahoo! Music, David Goldberg has been one of the leading critics of DRM in music.  Yahoo! has experimented with a number of DRM free downloads and Goldberg has said that DRM was on its way out industry wide.  Goldberg and Yahoo Music VP of Product Development Ian Rogers were Michael Arrington’s most recent guests on TalkCrunch.

The executives’ departure throws into question the future of Yahoo’s DRM strategy but if the company does sell off Launch then the future of Yahoo! Music could be in question.  At this point a sale is only rumored but we’ll follow up with details if and when they emerge.

Update: Yahoo! Music called to say that Launch is not for sale.

We’ve analyzed the services that sell digital music and are presenting the results in a two part post. This Part 2 compares the subcription music services that let you access an entire music library of up to 2 million songs for a single monthly fee. Part 1, posted last Thursday, focused on the pay-per-download services (such as iTunes).

While the pay per download market is dominated by Apple iTunes and the quasi-legal AllofMP3, the subscription music market is a more level playing field. There are strong product offerings from AOL, Napster, Rhapsody, Virgin and Yahoo.

All of these services offer a music library of at least a million songs to users for a set monthly fee. The product offerings are generally broken down into three main buckets: PC listening only, “to go” which allows moving music to a music device, and an optional download service to allow permanent ownership of the song (with DRM) and that can be burned to a CD.

Note that none of these services work with an iPod. They all utilize Microsoft’s PlayForSure DRM technology which is not compatible with the iPod. Also, none of these services work on a Mac. You must have a Windows machine to use them, although Rhapsody has some Mac functionality.

The Music Subscription Services

Overall, the best service based on pure stats is Virgin Digital, which boasts the largest catalog of music (2 million songs) and the best overall price at $8/month. Unlike all of the other services, Virgin charges one price for both the PC and to go versions. Virgin also has excellent additional features like user reviews of music create a social atmosphere.

All of the services require the download and use of a special player, except AOL, which uses a web based approach along with the Windows Media Player.

For the flat out cheapest price, Yahoo comes in at the lowest point with a basic plan of $5 per month (althought the to go plan is $10/month, higher than Virgin’s single price plan).

But based on pure joy of the user experience, Rhapsody has the slickest software and the most intuitive user interface. It’s the most expensive at $15/month, but worth the money if you want the best service available.

Both Google and Amazon are in the process of developing online music products, and will certainly have compelling product offerings of their own.

One of the key new features of Windows Vista and IE7 is something called Sidebar, which is a gadget platform. This will allow Live.com gadgets to be used right on the Windows desktop.I wrote a little bit about this after attending a Microsoft event called Search Champs in January.

Yahoo Music has very quietly released an Ajax gadget for Sidebar that will allow user to play Yahoo Music right from a Windows desktop, and it’s giving me a lot of ideas around the types of things that we’ll be seeing very soon.

Before this, to use Yahoo’s unlimited music product (all you can download and listen to music for $5 per month) you had to download the Yahoo Music Engine, which is their version of iTunes (a client based media player). But based on what Ian Rogers writes on the Yahoo Music Blog, this will no longer be the case. You will be able to listen to music right from a Windows desktop without using the Yahoo Music Engine.

I’ve included a couple of screen shots, including a close up of the player and a larger shot showing it on a Windows desktop. More screen shots are available on Ian’s post, linked above. You can also see a demo at this link, just skip ahead to 28 minutes and 10 seconds.

So the really interesting thing about this is, what other web and desktop applications will we be able to use via a gadget on the Windows desktop? My guess is, pretty much everything.