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XM, Napster in online music joint venture

By Sue Zeidler

LOS ANGELES (Reuters) - Online music vendor Napster Inc. (NAPS.O: Quote, Profile, Research) and satellite radio provider XM Satellite Radio (XMSR.O: Quote, Profile, Research) are making music together.

The two companies said late on Tuesday they would launch an online service that enables XM's 4.4 million subscribers to buy music they hear on the paid XM radio service.

The two plan to jointly launch "XM + Napster," in the fourth quarter of 2005 in conjunction with the availability of new XM/MP3 players that let users bookmark songs they hear while listening to the radio for future purchases online.

After the MP3 player is connected to a personal computer, the service will match the marked XM titles with songs in Napster's catalog so that they can be purchased.

Subscribers can also use the XM + Napster service to organize playlists using other songs from personal libraries and transfer these unique playlists to the XM players.

Currently XM's MyFi portable radio sells for about $299.

Those XM subscribers without the new MP3 devices, can also tag songs for purchase online through XM Radio Online, a Web-based service.

Analysts have long said satellite radio is likely to converge with music players and other portable devices. XM Satellite is the No. 1 satellite radio provider, directly competing with rival Sirius Satellite Radio Inc. (SIRI.O: Quote, Profile, Research) in the nascent market.

Sirius in February said it had discussed with Apple Computer Inc. (AAPL.O: Quote, Profile, Research) the possibility of adding its service to Apple's popular iPod music player, but Apple Chief Executive Steve Jobs did not see the need at that point to combine the functions.

After launching its wearable MyFi device in October, XM chief executive Hugh Panero said he believed one day a portable satellite player would be combined with portable players that store music, like an iPod.