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Major cellcos are increasingly enthusiastic about the ARPU potential of mobile music download services, and are starting to engage in the branding battle that we have already seen in areas such as mobile email. Faced with services such as Apple iTunes that are heavily branded by the content or device maker, cellcos are fighting back with offerings that bear their own label and user interface and so carry a higher margin, as well as helping to retain customer loyalty.

Verizon Wireless has duly announced VcastMusic, a service fuelled by music aggregator The Orchard as the preferred provider of independent music. The service allows users to choose between downloading music tracks to their phone or to their PC for later copying to the phone.

Songs bought over the airwaves will cost $1.99 and two copies of the song will be sent - one that will play on the phone, and another that will play on a PC. Songs bought over the internet to a PC will cost $0.99. Compatible handsets include LG Electronics VX8100 and the Samsung a950. The service goes live on 16 January and The Orchard promises that it can contribute more than 700,000 of the anticipated 1m tracks that the service will eventually hold.

However, the website PCS Intel - a site dedicated to rival Sprint’s PCS services - has heard unconfirmed reports that when customers sign up for the Verizon program, a piece of Microsoft software stops the phones from being able to play MP3s - even if they could before the upgrade.

The word is that this is to make sure that only songs in Microsoft's formats can play. An internal memo from Verizon Wireless was claimed to have been seen, making it clear that customers were not to be warned ahead of time that an upgrade will wipe out their MP3-playing abilities.

Meanwhile, Verizon Wireless co-parent Vodafone is launching its own interactive music service in conjunction with Sony NetServices to create Vodafone Radio DJ. The service streams music to both 3G mobile phones and personal computers.

The services will be offered for a single monthly subscription price, for unlimited listening to music on both the mobile phone or the PC. There are no pricing details yet, but this service will only be available on 3G phones so it acts as a spur for Vodafone customers to upgrade.

Vodafone will launch over the next two months in the UK, France, Germany, Spain, Italy and Portugal and then gradually roll the services out to the rest of the world over the coming 12 months. It is not clear where all of the music comes from, but both Vodafone and Sony have rights to most of the world’s popular music through previous deals on the Vodafone Live! service and on Sony Connect.

Customers can access streamed radio channels, bespoke collections and channels defined by customers themselves. Vodafone said a key feature of the new service was its personalization system, which would allow users to customize radio channels to their own personal tastes by simply pressing a button to indicate "like" or "dislike" while listening to a song. If you don’t like a song it will skip to the next one and keep track of the songs you don’t like and build a profile of what type of music you prefer. Vodafone talks about the new system as much as a way of discovering new music as a way of enjoying it.

This analysis was originally published by our sister service, Faultline, which focuses on models for service providers in the broadband, multimedia and triple play sectors. For more information please email Peter White on peter@rethinkresearch.biz.

Copyright © 2006, Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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