“We’re no longer competing with the iPod,” Rhapsody Vice President Neil Smith said. “We’re embracing it.”

The move takes direct line at Apple’s immensely popular and profitable iTunes online store. The new Rhapsody site matches Apple’s 99-cent a song download charge, or $9.99 album pricing. But it allows users to listen to an entire song before purchasing, compared to Apple’s 30-second preview.

The new Rhapsody site, open only to U.S. users, offers downloads in the MP3 format, free from the DRM (Digital Rights Management) technology that limits the transfer of downloaded music between portable devices and computers. That means, song bought from the new Rhapsody store can be directly transferred to iPods.