AT&T Inc, the biggest U.S. mobile service, said on Monday it would offer wireless song downloads from Napster Inc's digital music service, expanding an existing agreement.
AT&T, which already lets Napster subscribers transfer music from their personal computer to their cell phone via a cable or a storage card, said it would sell Napster music directly on its phones for $7.49 for a bundle of five songs, or $1.99 for a la carte purchases, beginning in mid November.
Napster, which only gives customers access to the downloaded music as long as they pay monthly subscription fees, charges about $15 a month for unlimited music transfers for its existing portable music service. Its computer only services costs subscribers about $10 a month.
Apple Inc, which leads the digital music market, sells songs for 99 cents each as does Sprint Nextel, the No. 3 U.S. mobile service.
AT&T's director of premium content Rob Hyatt acknowledged that the price is more expensive that rival offers. But while the price may put off many consumers, it would attract young music fans who want to make spontaneous purchases.
They're very price insensitive, he said in a telephone interview with Reuters.
About 10 million U.S. consumers are expected to download about 70 million songs to their phones in 2007, according to technology research firm IDC, which expects 44 million U.S. consumers to buy songs directly on their phones by 2011.
Music is part of a growing number of advanced services, such as video and Web surfing, that mobile operators have been adding in an effort to boost revenue by encouraging customers to use their phones for more than just talking.
Napster, which draws on a library of 5 million tracks, is the second over-the-air music offer from AT&T, which was slower than its rivals to deliver song downloads directly to phones.
AT&T already offers wireless downloads through digital music store eMusic at similar rates to its Napster fees.
AT&T did not say on which phones the Napster service will work. It will not work on Apple's iPhone, which only supports to Apple's iTunes music service and does not allow wireless downloads over the cellular network.