By Sinead Carew
Verizon Wireless on Thursday announced a music download service for its subscribers with a catalog of 1 million songs, going head to head with its biggest rival, Sprint Nextel Corp., which launched a similar service last year.
Verizon Wireless, the No. 2 U.S. cell phone provider, said it would charge $1.99 a song for wireless downloads and 99 cents a song if the customer downloads the song on a personal computer first.
Sprint Nextel, which launched its music service late last year, charges about $2.50 per song.
Verizon Wireless is a joint venture of Verizon Communications and Vodafone Group Plc .
Verizon Wireless Chief Operating Officer Lowell McAdam said music would be the company's most important source of revenue growth for data services. Data services represents about 8 percent of revenue.
"I think this will double data as a percentage of revenue in the next two to three years," McAdam told Reuters.
Verizon Chief Executive Officer Denny Strigl cited analyst estimates for music to represent about $3 billion of revenue for the wireless industry in about four years -- marking a huge opportunity for the company.
McAdam also said he believes Verizon's current pricing models for music would be appropriate for the next 12 months but could change after that.
He said possible changes for the service that runs on Microsoft's Media Player software could include a subscription model or charging different rates for different phones, depending on agreements with its music partners.
Verizon Wireless and its rivals are trying to get subscribers to use their phones for everything from watching video clips to surfing the Web, with the aim of growing revenue even as the price of phone calls falls.
Verizon Wireless said it would kick off the music download service, which will work on its high-speed network covering about half the population, on January 16.
Consumers will be able to search or browse for music on their personal computers or on their phones through the new service, which also offers the option of providing text message alerts when a favorite performer has released a new album.
Verizon Wireless said it expects to have a music catalog of about 1 million songs from the major music labels.
Copyright 2006 Reuters Limited.
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