AT&T has joined Sprint in offering the Pandora Internet radio service over its music phones, creating a personalized music channel for subscribers that may lead to discovery of new music and AT&T’s other music services.

Pandora is a customizable Internet streaming service with a database of millions of songs spanning a century of music. However, instead of receiving a preprogrammed music feed or allowing customers to select a play list, Pandora uses a series of algorithms to select music for its customers based on their musical tastes and preferences. Starting with a single song the customer selects, say the Rolling Stones’ “Painted Black,” Pandora will analyze its entire content library for songs that share similar characteristics with the Rolling Stones’ hit, selecting traits as obscure as syncopated rhythms or levels of instrumental feedback to determine the appropriate music to program for each listener. Customers further refine the basic algorithm by rating each song played with a “thumbs up” or “thumbs down.”

The approach differs wildly from other music-matching services, which are usually based on what other customers have enjoyed in addition to a song or album played. Instead of relying on statistical market data, Pandora relies on a panel of musicians from the Music Genome Project to categorize and subcategorize individual songs with hundreds of musical traits. The end result—and probably the most attractive element to AT&T and Sprint—is that the engine selects songs customers would never likely listen to on their own, exposing them to unfamiliar music they will probably like.

The question is whether operators offering Pandora can use the engine’s recommendations to cross-sell over their other music platforms, said Roger Entner, an analyst at IAGR that has closely studied all of the U.S. operators’ music strategies. Most of the operators are still working with first-generation content distribution platforms that allow them to upsell within a specific music category but not upsell cross-category, he said. For instance Sprint can recommend a ringtone similar to the ringtone you just bought but can’t recommend a full-track download to accompany the ringtone. Tying a music discovery service like Pandora to the operator’s music download stores could result in many more music track purchases.

AT&T and Sprint have managed to bridge that gap somewhat. The Pandora service allows customers to bookmark a song, saving the title and artist so a customer can purchase the song later. But the bookmark exists only with the Pandora service and does not link up with either of AT&T or Sprint’s online music stores, meaning the customer could just as easily download the song at home or buy the physical CD as they could search for the track on the carrier’s mobile portal. Enter, however, believes this will change soon, and AT&T has a particular stake in enabling such cross-selling technology due to the breadth of its music offerings.

AT&T launched a fully stocked over-the-air music download portal last month at CTIA Wireless IT & Entertainment with Napster, but it still retains its multi-tired music strategy, offering customers choices between full-track downloads from eMusic and Napster, side-loading support for Yahoo Music, linear music streaming from XM Satellite Radio and even supports off-deck music downloads through third-party music portals like Groove Mobile.

The Pandora service for AT&T isn’t cheap, though. AT&T is charging $9 a month after a five-day free trial, and it isn’t exempting customers from data plan charges, encouraging customers to sign up for its $20-a-month unlimited data plan. The service works over the 3G network and is supported on eight of AT&T’s current UMTS/high-speed downlink packet access phones.