Verizon, Rhapsody Team up on Mobile Music

First Phone Optimized for VCast Music

The first phone fully optimized for VCast Music with Rhapsody will be the Chocolate 3 from LG Electronics, which will go on sale by the end of July, Ruth said. But there will be firmware upgrades for several existing handsets that will give them most of the same capability, he added. Most of the difference is in how quickly users can synchronize large amounts of content between the phone and PC, he said. VCast Music with Rhapsody will cost $14.99 per month. Over-the-air song purchases through the phone, which won't require a subscription, will cost $1.99 and include one copy of the song for the phone and one for the buyer's PC.

The number of people listening to music on their phones is growing rapidly, up 30 percent just from December 2007 to April of this year, according to research firm M:Metrics. Most still "sideload" music purchased elsewhere, said M:Metrics analyst Mark Donovan. Only 1.3 percent of U.S. mobile subscribers -- 2.8 percent, for Verizon users -- download music over the air, he said, but over-the-air sales are growing.

Lower prices and ease of use will be keys to further expanding the mobile music business in the U.S., according to In-Stat analyst Stephanie Ethier. U.S. consumers are still more comfortable with a la carte music purchasing than with subscriptions, she said.

VCast Music with Rhapsody may change that, M:Metrics' Donovan said. Music subscription services are like TiVo, where people don't really understand the benefits until they've experienced them, according to Donovan. A prime example would be a family with children, because the new Verizon service would allow them all to pick out music from the Rhapsody library and download it to as many as three mobile devices, as well as three PCs, he said.

"I don't think that any carrier worldwide has made a bunch of money from an over-the-air music store," Donovan said. "I do think that Rhapsody has the potential to mix that up."

Even as it stands, although AT&T's iPhone is the best-known music handset, it's just one device. Verizon has rolled out both its music service and its high-speed network more quickly, Donovan said.

"There are more people listening to music on Verizon phones than are listening to music on iPhones," Donovan said.