November 2, 2006 4:00 AM PST

Cingular to jump onto mobile-music bandwagon

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A correction was made to this story. Read below for details.
Cell phone operators want a piece of the mobile-music market, but to cash in they have to offer services that lets subscribers download songs over their networks instead of from their PCs.

So far, Verizon Wireless and Sprint Nextel are the only two major U.S. carriers offering such a service, with modest success. Sprint, which a year ago became the first, claims that more than 8 million songs have been downloaded since it launched the service. And Verizon, which launched its service in February, claims to be selling more than 1 million downloads per month.

Now, Cingular Wireless, the largest mobile operator in terms of total subscribers, wants a piece of the action too. The carrier, owned jointly by BellSouth and AT&T, announced Thursday that it's partnering with Napster, Yahoo Music, XM Satellite Radio and eMusic to offer a new music download service that will eventually offer people the option of downloading music over the Cingular network.

News of the deal was first reported Wednesday by The Wall Street Journal. Initially, the service will only allow songs to be downloaded onto phones from users' computers, but starting next year it will allow what is known as over-the-air downloads directly to phones, the article said.

Cingular is no stranger to the mobile-music business. Last year, it partnered with Apple Computer and Motorola to offer the Rokr, one of only a few phones that plays audio tracks purchased from Apple's iTunes music store. The carrier is also rumored to be working with Apple on the upcoming iPhone, which could be launched as soon as January.

But until now, Cingular hasn't discussed plans for a service that would let subscribers download music over the Cingular network.

"By offering the service over their own network, Cingular gets to control the selection of songs and the customer relationship," said Susan Kevorkian, an analyst with market researcher IDG. "But it has to be careful that if it launches its own branded music service, that it doesn't muddy the waters with other partners like Apple, which it will now be competing against."

A Cingular representative made it clear that Cingular is still working with Apple.

"Apple is a wonderful partner," said Mark Siegel, a spokesman for Cingular. "And we expect them to remain a wonderful partner for us."

Making music with cell phones
When it comes to listening and storing music on mobile phones, people typically have two options. They can download files onto their phones from a computer or they can use a carrier's mobile network to download songs directly to their phones.

The first option, called "side-loading," doesn't cost the person anything if he or she already owns the songs. This means people can import songs onto their phones from CDs they uploaded to their computer or songs purchased from an online music service. Unfortunately for mobile operators, they can't make money from songs that people side-load onto their phones.

Over the past year, Sprint and Verizon created new services that offered customers the option of downloading music directly to their phones over their 3G mobile networks. Because carriers control how songs are sold and because they own the networks that deliver the download, they can generate revenue from the service.

Even though downloading songs directly onto phones is typically at least twice as expensive as buying it somewhere else and side-loading it onto a phone, consumers seem to like the convenience.

 

Correction: This story incorrectly cited the average file size of music downloads offered by Sprint. It is 700 kilobytes.

CONTINUED: Explosive growth expected…
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