As we wait for streaming music service Spotify’s iPhone app to be approved by Apple, we have got news that subscription based streaming music service Rhapsody has submitted their iPhone app to the App Store for Apple’s approval.

iPhone apps like Spotify and Rhapsody will be competition to Apple’s iTunes music store, so it will be interesting to see if Apple approves them.Rhapsody’s iPhone app will allow users to individually select and listen to more than 6 million songs in its catalog on-demand over 3G/EDGE and Wi-Fi.

Users can also create their own streaming playlists but can’t save them to play them offline.

However, iPhone users will need a Rhapsody ToGo subscription to use the iPhone app, which costs $14.99 per month.

Rhapsody’s iPhone app is similar to the Spotify’s iPhone app in many ways just that Rhapsody works only in the US while Spotify works only in US Europe.

Rhapsody’s iPhone app like other third party iPhone apps will not be able to run in the background, which will be a major drawback for a music streaming service. (iPhone users who have jailbroken their iPhone can use Backgrounder to run it in the background.)

Rhapsody is quite confident that their iPhone app will be approved especially after the fiasco over Apple’s rejection of Google Voice related iPhone apps. Neil Smith, Rhapsody VP made the following statement:

“The app store is likely to be bigger than the music store some day, and not approving things for the app store is giving people a reason to say, ‘I’m not going to buy an iPhone,’”

Rhapsody on iPhone from Rhapsody on Vimeo.

What do you think?

[via GdGt]