Via our pals from the Unofficial Apple blog:

Yahoo acquires online music service Musicmatch, for $160 million. The acquistion, according to Yahoo CEO Terry Semel, will vault the Internet portal further into the the digital music space:

"Yahoo! is committed to being a major player in digital music," said Terry Semel, chairman and chief executive officer, Yahoo! Inc. "This combination bolsters our strategy to capture the largest audience of consumers as they make the shift to digital music and supports Yahoo!'s goal to give consumers the greatest choice, control and flexibility in how they interact with their music. This acquisition is one of several product innovations and new initiatives in which Yahoo! will invest to build our music portfolio this year and in the future."

Musicmatch, as part of its services, has a music download service called Musicmatch on Demand which offers approximately 700,00 songs. This acquistion by Yahoo will immediately thrust them into battle in the digital music downloads space with the likes of Apple, Microsoft and Real.