AT&T takes Napster mobile

AT&T’s music downloading store will officially be open for business on Friday. AT&T is taking Napster, the online downloadable music service, mobile on its latest music phone, the SLM by Samsung. AT&T announced its relationship with Napster at CTIA in October, but has thus far not released a handset to compete with Verizon and Sprint mobile music stores.

Napster Mobile, a new addition to AT&T’s Mobile Music suite of services, which includes XM Radio Mobile, Pandora, MusicID, and VIP access, a mobile fan club and music-discovery service, will enable users to purchase and download songs over the air. By searching a music catalog of 5 million songs, SLM users can then preview samples of each song, purchase and download the song to the handset, all in less than one minute, according to AT&T.

AT&T and Napster Mobile take the unique approach of offering a Napster Mobile Five-Track Pack option, which gives users five free downloads plus an additional five tracks per month for $7.50. Otherwise, users can purchase songs a la carte for $2, similar to Verizon and Sprint’s services.

Roger Entner, senior vice president, communications sector for IAGR Research, said that the price point is low enough to make adding on music downloads a no-brainer for most AT&T customers.

“It all drives towards the Swiss army device that can do everything pretty well,” Entner said. “This is one of the other building blocks. If you look at the lessons we have seen from some of the things that Verizon has done, the market is quite price-insensitive when it comes to over-the-air music downloads.”

After Microsoft’s announcement yesterday that it will pay $46 million to purchase Openwave System’s Musiwave, a relatively low price tag, some analysts took it as an indicator that growth in mobile music has not been as strong as players in this space had hoped. Entner, however, said that the fact that Verizon and Sprint have demonstrated the demand for this type of service in the United States, coupled with Napster Mobile’s success internationally, makes a case for AT&T and other wireless service providers’ success as well.

“Over time, I think we will see quite a number of handsets with music capability,” Entner said. “Give it a year or a year and a half, all phones will have music capabilities. It is just so cheap to put in and such a terrific value for both the user and the carrier alike.”

He added that AT&T’s choice to enter the market after its competitors already had services in place was a reflection of its HSDPA network not having reached critical mass until this year. He said it is better to play to the company’s strengths – let others evangelize the market, prove the business case and then enter the game.

The handset, priced at $150 after a two-year contract activation agreement and a $50 mail-in rebate, also features video share and mobile banking capabilities, stereo Bluetooth technology, a 2.0 megapixel camera with video capture and advanced messaging options. To support the music services suite, the SLM handset includes a 512MB SD memory card and 3.5 mm headset adapter.