AT&T unveils mobile Napster as questions abound

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Questions filled the air Monday as the mobile industry geared up for one of its biggest U.S. trade shows on Monday by focusing on entertainment.

AT&T got a head start on the CTIA Wireless I.T. & Entertainment show in San Francisco by unveiling an upcoming music service with Napster Inc. But even AT&T said the best business model for mobile entertainment is still being worked out.

The market for mobile entertainment still pales in comparison to messaging, which more than half of AT&T’s customers use, said Mark Collins, vice president of consumer data at the nation’s biggest carrier, which has about 63 million subscribers. Collins thinks mobile entertainment will catch on to that degree, but the jury is out on the best business model for getting there, he told a large crowd at a pre-show entertainment conference.

On Monday, AT&T announced it will let consumers download songs over the air from a Napster catalog of more than 5 million songs. The Napster Mobile service, due to become available in mid-November, will offer single songs for US$1.99 each and a monthly subscription for $7.49. The subscription will let customers download five songs each month. Features for discovering new music and keeping up with favorite artists will also be included.

The service is meant to complement song downloads to PCs for later “sideloading” to a phone, said Gregg Brown, who handles strategic marketing and business development for music at AT&T. The carrier already offers that type of service but believes some consumers want to be able to buy songs immediately, he said. A copy of each song bought over the air can also be automatically delivered to the customer’s PC.

It’s an example of the try-anything approach carriers and content makers are taking to mobile entertainment. Also at the pre-show conference, ESPN Inc. Senior Vice President for Digital Media John Zehr said the sports media company closed down its MVNO (mobile virtual network operator) business last year because it had a harder time than expected selling handsets in retail stores. It also was unfair to sports fans to make them switch service providers and phones just to get ESPN’s mobile content, Zehr said.

Now ESPN’s content is offered through Verizon Wireless Inc.’s portal. Soon the company will add social networking to help fans of certain teams keep in touch, Zehr added.

ESPN’s goal is to make it as easy as possible for consumers to find its content — preferably on the “idle” screen of the phone whenever they look at it, Zehr said. Carriers should find a way to determine what each subscriber would want to see on that screen, or ask them, rather than making them take the initiative, he said.

But ESPN has another thing coming if they hope to dictate placement, according to IDC analyst Shiv Bakhshi.

“The content provider never controls the environment of consumption,” Bakhshi said.

Clashes happen partly because the market is so young and demand is still little known, AT&T’s Collins said. It’s hard to work out business models that satisfy carriers, content providers and advertisers, he said. Everyone wants to get into the mobile world because cell phones are ubiquitous, but carriers can’t pay top dollar for content when the customer base isn’t that big yet. Device makers add another layer of complexity.

“We can’t just take the cable television or the broadcast model and superimpose it on this business,” Collins said. The right model will be some mix of advertising, subscribers paying for content, and makers of programming selling it to carriers, he said.

This story, "AT&T unveils mobile Napster as questions abound" was originally published by PCWorld.

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