Nokia tunes up for battle with Apple

Nokia has teamed up with Universal Music to allow mobile phone users unlimited free downloads from the largest music company in the world's catalogue, a move that should stimulate significant mobile music usage and put pressure on Apple's iTunes which dominates the download market.

As part of its move into services, Nokia has launched a new offer called "Comes With Music", which will be available from the second half of next year whenever a user buys a new Nokia handset. The consumer will be able to download an unlimited amount of songs from Universal's back catalogue, which boasts millions of songs from artists such as Willie Nelson, Elton John and Bon Jovi and new acts such as Amy Winehouse and Teddy Thompson. Once downloaded, the user will keep the songs.

The market for music downloaded straight on to mobile phones is still nascent, but has been given a publicity fillip by the launch of Apple's iPhone. However, Apple's dominant position in the digital download space, where iTunes commands a market share of around 80 per cent on some estimates, is not yet replicated in the mobile handset market where Nokia is by far the largest player with well over 1 million sales a day. For music companies, mobile phones provide direct access into a consumer's pocket, no matter where they are.

Universal Music has moved to reduce its dependence on iTunes and in July it refused to renew a long-term agreement with Apple, instead making its content available on rival platforms. It is thought Universal will take a cut of the revenue Nokia books when selling the device while the music will be tracked via digital rights management to ensure the artist is compensated for the download.

Mark Milligan, an analyst with Jupiter Research, said: "Nokia is in a unique position to turn the mobile music market on its head. This offering is a massive step in that direction." He called the move "brave", arguing Universal is the most "digitally ambitious and innovative of the record labels ironically, with least need to be". However, he said the move was risky as it suggests the only way to drive mass-market adoption of digital music is to give it away.