Verizon plans to offer mobile music downloads

The new service, called V Cast Music, is scheduled to become available on Jan. 16 at Circuit City, Verizon Wireless stores and Verizon's Web site, according to documents seen by CNET News.com. It would allow customers to browse, preview, download and play music from a mobile handset and a computer.

The service is designed to offer songs from artists on major music labels, including Warner Music Group, EMI Music, Universal Music Group and Sony BMG. Verizon expects to offer more than a million songs by spring, the documents said.

A Verizon representative declined to discuss further details before a Jan. 5 press conference at the Consumer Electronics Show in Las Vegas. The press conference is scheduled to feature Verizon Chief Executive Denny Strigl, and Microsoft Chief Executive Steve Ballmer is expected to attend. Details still to come include those for service and song prices, handsets that support the service and the number of songs those devices will hold.

Verizon's entry into the music download market was expected and comes amid a broad push by a mobile phone companies to challenge Apple's success with iTunes and the iPod. Sprint Nextel introduced a similar service in October with the Sprint Music Store. Motorola took a different route. It teamed up with Apple to unveil an iTunes-compatible phone, the Rokr, in September.

Verizon hopes to stand out from the crowd with a feature it claims is unique. Through a partnership with Microsoft, the V Cast Music service allows customers to transfer music between Windows PCs and mobile phones. Verizon says it's the only wireless services company in the U.S. to offer that feature. Customers also need Windows Media Player 10 to access the V Cast Music store.

Verizon launched the first version of its V Cast program early last year, tapping Microsoft technology to help run a streaming video service of much better quality than anything previously on the market in the United States.

That initial deal helped solidify a relationship between the two companies that would be extended with the new V Cast Music service. The music service marks another critical step forward for Microsoft into the mobile infrastructure market, where it had initially been slow to gain traction.

Delivering music over mobile phone networks has been one of the biggest topics of discussion in the music industry over the past year, with services in Europe and Asia launching ahead of those in the U.S. Warner Music owner Edgar Bronfman even told attendees at a recent mobile phone industry gathering that they were at "the music industry's most important conference."

Record labels have looked at the hundreds of millions of dollars being spent around the world on ring tones--the snippets of songs that substitute for a conventional phone ring--and seen that as ample evidence that consumers are likely to purchase music over the phones as well.

But label executives are also eager to jump-start a viable alternative to Apple Computer's iTunes. The music companies have chafed against the power that Apple's Steve Jobs has acquired to set industry-wide prices and policies for digital music, and some executives hope to see that diminish as the phone companies gain market share.

It's still an open question whether consumers in the U.S. will react as eagerly to music services on the phone as have their counterparts overseas, however.

GartnerG2 analyst Mike McGuire said his firm's research data hasn't shown a groundswell in demand for full iTunes-like capabilities on the phones.

"We've seen a lot of interest in listening to music, but not necessarily in downloading it over the air," he said.

Pricing will also be a critical issue. The Sprint store, which launched in October, charges $2.50 per song, compared to the 99 cent average at iTunes and other PC-based stores. Verizon representatives would not discuss pricing, but documents indicate it is leaning toward Sprint pricing. Like Sprint, the company plans to deliver two copies of each song with every download--one for the phone and one for the PC.

Phone companies and labels have defended that kind of price premium in the past, saying that consumers will pay extra for instant gratification and convenience, as opposed to waiting until a PC is handy. Analysts have said that consumers in the U.S., who are more accustomed to Internet and PC-based services than their Asian and European counterparts, may be more willing to compare the prices directly to those offered by iTunes and other online rivals, however.

Song capacity is another key factor. Sprint's service lets customers store up to 1,000 songs on certain Sanyo and Samsung phones with the purchase of a 1GB memory card. Motorola's iTunes-compatible Rokr holds just 100 songs.