Nokia aims to take bite out of Apple

The world's mobile handset maker is launching a 'free' music package and its first touch phone in a challenge to Apple's dominance of the digital music market.

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Apple controls slightly more than half of global digital music sales through its iTunes store, but challenges are mounting from mobile handset manufacturers. Nokia's announcement follows the launch of an unlimited music service by Sony Ericsson in Sweden.

Reuters Technology Correspondent Matt Cowan reports.

STORY:

From an historic London music venue, an announcement that many believe will reshape the long-standing music model.

The world's largest handset manufacturer Nokia is partnering with the four major music companies as well as a number of independent labels to launch a free, unlimited download service that will work with a number of newly-launched handsets, including the company's first ever touchscreen phone - the 5800 Xpressmusic.

SOUNDBITE: Tero Ojanpera, Head of Entertainment, Nokia saying (English):

"We are focussed on consumers rather than competition."

Nokia's head of entertainment Tero Ojanpera may not want to talk about Apple directly, but many are reading these announcements as a direct challenge to the Cupertino company's dominance of the digital music market.

SOUNDBITE: Tero Ojanpera, Head of Entertainment, Nokia saying (English):

"So the number one goal for us is really about increasing the music consumption on mobile phones."

Jupiter Research Analyst Mark Mulligan says the music industry desperately needs new music models such as the Comes With Music service to take off.

SOUNDBITE: Mark Mulligan, Jupiter Research Analyst saying (English):

"Let's be absolutely clear. Digital has for all intents and purposes failed in everything it should have done so far. It's essentially a niche activity which is not offsetting the decline in CD sales. // I think Comes With Music is the first of those that could be a new format and certainly could compete with free."

That's certainly what the music industry is betting on, enough to risk the cannibalization of physical formats. Rob Wells is the head of digital at Universal, the world's largest music company.

SOUND OF REPORTER ASKING "What does this do to the music model as we know it?"

SOUNDBITE: Rob Wells, Head of Digital, Universal Music saying (English)

"It completely the game. It moves the game from being a purchase model to being an access model. So where consumers have historically bought music in the form of a CD, or a tape or even from an a la carte download store, this moves it to an access model and where there is access there is no need to own so you undermine the need to pirate."

Black Eyed Peas singer will.i.am hailed the announcement as a major move forward step forward for the digital music business.

SOUNDBITE: will.i.am, Black Eyed Peas singer saying (English):

"Just having iTunes and Amazon isn't enough when you have this huge tent that you have to lift up. You can't just have two pillars. I applaud Nokia for adding their pillar. Now you can actually put the tent up. You can't put a tent up with two sticks. That's not a tent. That's a freakin' volleyball net."

At first, the Comes With Music service will only be available in the UK, launching October 16h through Carphone Warehouse. But Nokia has plans in place to bring it to additional territories in the near future, including Apple's home turf in the U.S. next year.

Matt Cowan, Reuters