O2 unveils music player to rival iPod

O2 is making its first foray into the consumer entertainment sector by becoming the UK's first mobile operator to launch a stand-alone music player.

The device was launched this week and will be supported by a major marketing campaign next year. O2 intends it to replicate the success of Apple's iPod by enabling users to download the latest singles by leading artists, including Beyonce and Eminem for £1.50 a track.

O2 has joined up with the world's biggest record labels, including Universal, BMG and Warner, to run the music service. It also has exclusive access to content from MTV and is seeking agreements with other content owners.

The music player will operate separately from O2's phones, but users will have to have an O2 phone in order to pay for and download up to seven hours of tracks via GPRS. The cost of the service will be charged to the customer's mobile phone bill.

The player will retail at £99 in the run-up to Christmas, but will be available only via O2's web site initially. It will be marketed via a digital viral campaign by Agency Republic and through direct marketing activity to O2's GPRS customer base of more than one million.

It intends to roll out the player onto the high street in the new year, supported by an above-the-line campaign through Vallance Carruthers Coleman Priest.

O2 hopes the player will be a major point of differentiation from its rivals and it will be integrated into some phones early next year. O2 is also in discussions with electronics firms, thought to include Sony and Panasonic, about offering the service in Walkmans and digital music players.

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