AT&T to Offer Wireless Music Downloads from eMusic

AT&T Inc. (T) on Tuesday launched a service with eMusic, a retailer of music from independent labels, that allows customers to download songs directly to their mobile phones.

AT&T is the last of the top three U.S. mobile services to offer over-the-air music downloads as a way to get customers to use phones for more than just talking.

The biggest U.S. mobile service plans to charge $7.49 for five songs, almost five times eMusic's most expensive 33-cent rate for customers who subscribe to its desktop service.

U.S. wired service providers have tended to charge a premium for mobile music delivery, saying customers would be willing to pay more for impulse on-the-go purchases. But No. 3 U.S. mobile service Sprint Nextel Corp. (S) cut its wireless song price to 99 cents from $2.49 earlier this year.

The AT&T fee of about $1.50 per song is higher than Sprint's, but lower than Verizon Wireless' (VZ) fee of $1.99 per wireless song download.

In comparison, Apple Inc., the leading vendor of digital music with sales of 3 billion songs so far, has long charged 99 cents per song for its service, which only delivers music direct to computers. It does not provide wireless downloads to its iPhone, which is sold exclusively by AT&T and Apple (AAPL).

The eMusic service will not work on iPhone.

Late last year, AT&T began letting its subscribers transfer music from online subscription services from Napster Inc. and Yahoo Inc to their phones.

Jupiter Research analyst David Card said wireless music popularity was limited by higher song prices and the difficulty of searching for music on small mobile phone screens. About 24 percent of U.S. adults listen to music on portable digital music players, while only 5 percent listen on their phones, according to Card, who said that figure may even be overstated.

Card said the deal with eMusic, which tends to sell music from less-mainstream artists, was an odd choice for AT&T.

"(Wireless downloads are) likely to be more about impulse purchases and buying the biggest hits, but eMusic isn't going to have the biggest hits," he said.

Artists on eMusic range from older acts like Creedence Clearwater Revival to more recent performers such as the White Stripes.

AT&T said the service would work on about three phone models from Samsung Electronics Co Ltd. and one handset from Nokia.

AT&T said eMusic, which has a catalog of 2.7 million songs, would allow customers to preview selections before they commit to a purchase. As with rival services, users can download a copy of each song purchased to their computer at no extra charge.

EMusic is a unit of Dimensional Associates, the private equity arm of JDS Capital Management.