AT&T AND ATLANTIC TEST MP3 PLAYER CELL PHONE

Full-Length Albums-on-Chips Marketed as Companion Product

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NEW YORK (AdAge.com) -- AT&T Wireless and the Atlantic Group have embarked on an project to determine whether cells phones
Photo: Hoag Levins
The Nokia 3300 phone plays MP3 music albums on MultiMedia computer chip cards hardly larger than a quarter.
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will work as a new tentacle of the music distribution business.

The companies are not selling ring tones but offering samples of new albums, as well as a platform on which consumers can play albums-on-a-chip just as they would a CD.

Major artists
Since the first week of December, current full-length CD releases from four Atlantic/Lava artists -- Sugar Ray, Simple Plan, Sean Paul and Nappy Roots -- have been for sale as a chip at AT&T Wireless outlets nationwide for play on the new Nokia 3300 hybrid cell phone/MP3 player, which utilizes the MultiMedia Card (MMC) format. A compilation record on MMC is also being used as an incentive with the purchase of the Nokia 3300.

"Usually wireless companies come to us with typical cross-promotion ideas and ring-tone deals and such, but this was a little different in that it's a manipulation of music delivery. It's exciting for us to test the waters," said Lee Stimmel, Atlantic's senior vice president of strategic marketing and business development. "There is no downside for us. Worst possible scenario is it's great exposure and merchandising in more outlets than I would have been in during Christmas for my hard-core records. Best-case scenario is we sell through these and build a platform out like iTunes."

Ironically, record label executives such as Mr. Stimmel now are embracing wireless systems as a potential way to harness the same digital technology that spawned the rampant, illegal downloading of music, one of the primary reasons behind the industry's recent woes in record sales.

Chip albums at $28.95
The MMC-formatted albums, which look like postage stamp-size versions of the chips now routinely used in digital cameras, retail at national AT&T Wireless outlets for $28.95.

Brian Murphy, CEO of branded entertainment producer Fearless Entertainment, who brokered the deal between

Photo: Hoag Levins
A series of music albums have been produced in the tiny MMC format and packaged much like CDs.
Atlantic and AT&T, acknowledged that "you're not going to be able to sell a million of anything at that price." He said the value of this program lies in providing both parties an early read on the potential of MMC as a new format. "The MMC compilation as giveaway was a slam dunk, but the leap of faith is to introduce albums to show the possibility [through purchases by early adopters]."

A test run of the new system by AdAge.com concluded that two aspects of the cellphone/MP3 player package needs to evolve further before it is likely to lure large numbers of musical "digirati." First is price; second is mechanical convenience. The $28.95 cost of an MMC-chip album is $10 higher than the price of an average CD, which is already blamed by many observers for the mass stampede of consumers away from CDs and toward illegal Internet downloads.

Clumsy chip interface
The convenience factor involves the physical design of the current Nokia 3300 MP3 and FM Radio phone that is the core of the package. In order to change a chip, a user must pry off the rear panel, remove a battery and then wrestle with an awkward clip-holding clasp in an equally awkward small, interior space. Chip changing is neither elegant or fast and is too much of a chore for a marketplace that is used to simply slipping in a disk or pressing the center button of an iPod (though it's possible a simpler interface can be engineered in the next generation of the MP3 phones).

On the bright side, the quality of the earbud stereo sound is first rate and equal to the best an iPod or equivalent MP3 player can deliver.

It's also likely that the price of this configuration will drop if the product gains deeper market penetration. Look no further than the recent pricing history of digital camera phones, which debuted on the market only a short while ago in the $500 to $600 range and are rapidly moving down toward $100.

AT&T Wireless stores
Brian Linver, director of equipment marketing at AT&T Wireless, was careful not to hype the potential of the MMC format. "Our stores are broadening their scope in terms of what we do or don't do, but it may be a bit of a stretch to say that AT&T Wireless stores are becoming music stores."

Despite his caution, Mr. Linver has reason to be optimistic, considering research that clearly indicates a strong interest on the part of young people to access music on their cell phones. According to a random study last year by popular children's Web site NeoPets.com, which elicited responses from over 3,000 individuals ages 5 to 23 (more than 90% were 18 or younger), more than 56% wanted cell phones that play music vs. 37% that wanted cell phones that take photographs.

Adding something of a curious sense of marketing nostalgia to the project is its branding as part of the now abandoned AT&T Wireless "mLife" campaign. That high-concept effort, created by ad agency Ogilvy & Mather, sought but failed to communicate the joys of a mobile, technologically-driven lifestyle of the sort this new MP3 player phone clearly celebrates.

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