Napster and O2 link up to offer 5 million tracks

O2 has signed a deal with Napster, the online music site, that gives the mobile operator's subscribers access to 5 million tracks for download to both the phone and PC.

The service, which will extend O2's current limited music offering, prices individual songs at 99p and bundles of five at £4.

The mobile music market is attracting increasing interest from all mobile operators. Digital downloads to PCs and phones shot up by 50 per cent last year and is expected to outstrip the ringtone market, which was worth £250m in the UK last year.

The partnership with Napster is good for O2 because of both the strength of the site's brand, and because it gives customers access to a music library five times larger than that of its nearest mobile competitor. It also brings established relationships with music publishers.

"In dealing with the music industry it is important to have a partner with contacts with the leading labels because we need all the parts to come together," said Antony Douglas, head of entertainment content at O2.

Content deals with mobile operators are also central to music publishers' attempts to reinvent themselves in the face of rising online piracy. Singles sales, typically to young people, is the market most hard-hit by illegal downloads. The music industry is hoping that making individual tracks available digitally for dual download will help to recapture the youth spend.

"There is a paradigm shift from bricks and mortar to the digital world and O2 is essentially offering a retail space with 18.5 million customers," said Matt Ward, the firm's head of music.

Part of the attraction for Napster, which already runs a similar service in eight other regions of the world, is not only O2's market-leading position in the mobile music sector, but also future plans linked to wider sponsorship arrangements.

"O2 was an obvious partner because of its significant footprint in the music world, such as sponsorship of the Wireless Festival and the O2 Dome," Thor-sten Schliesche, Napster's European marketing dir-ector, said.

Possibilities include dir-ect marketing of exclusive live tracks or merchandising available for download via the phone immediately after a concert.

The track prices offered through the deal reflect an industry-wide trend to align prices with Apple's iTunes site. Windsor Holden, a principal analyst at Juniper Research, said: "All the operators are fishing around for a model that is attractive to customers and makes financial sense."