Apple announces new music download service, Groove to fight on

Music services have been slow to let mobile users pay to download music from the Internet, but that just changed, with Apple announcing that iPhone users can now do so.

They’ll be able to buy music from iTunes directly, no longer having to download to their home computers and then sync to the device.

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At 99 cents, that’s attractive. Especially with Apple’s accompanying announcement that it has slashed the price of its popular 8 gigabye iPhone to $399, down from $599.

Meanwhile, Groove Networks, a company that has already been offering music downloads to mobile users, announced that it would fight on against Apple’s initiative by taking $6 million more in funding from venture capitalists.

Groove says its users have downloaded 35 million songs since 2004, striking distribution deals with Vodafone, MTS Allstream and Sony BMG to allow their subscribers to access Groove.

But its mission may be uphill going forward. It cost $2.50 to download a song on Groove, way more than iTunes’ 99-cent price. Groove does let you play your song on your cell phone and save a version to your PC for playing as well, however. The company sells songs from EMI, Warner Music International and some smaller labels.

Groove took the funding from ORIX Venture Finance. It has now raised a total of $32 million.

Former backers in include Egan Capital, Charles River Ventures, Kodiak Venture Partners, and Star Ventures.