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Nokia Rings Up Loudeye Buy

By: David Utter

The global leader in mobile handsets has its eye on the mobile music market, an arena fraught with high prices and no consistency between mobile network service providers.

Nokia Rings Up Loudeye BuyNokia (NOK) disclosed its intention to purchase Loudeye (LOUD) for approximately $60 million in an all-cash transaction. The acquisition sets the stage for Nokia to become what some are calling the iTunes of the mobile market.

It is a $60 million bet that mobile multimedia devices will become the preferred way for people to listen to music while they are on the go. Nokia plans to be a comprehensive player, in offering the devices, applications, and digital music purchases to its handset customers.

Nokia disclosed in a statement about the transaction that it had sold 15 million music-optimized devices like the N91 in the second quarter. To compare, Apple (AAPL) sold 8.1 million iPods during the financial quarter that ended July 1st.

"People should be able to access all the music they want, anywhere, anytime and at a reasonable cost," said Anssi Vanjoki, executive vice president and general manager, Multimedia, Nokia. The company plans to have its mobile music initiative reaching consumers in 2007.

An ending to Vanjoki's statement could be as long as they aren't in the US. Major wireless service providers have made attempts at entering the mobile music market. Instead of ease of use and competitive pricing, those providers have made song purchases a high-priced proposition.

For example, Verizon (VZ) introduced its Chocolate phone, made by Korean giant LG. On top of plan charges for the phone, users have to pay $15 extra per month for the V CAST service just to access Verizon's multimedia options, including music.

Downloading music over the air from V CAST costs $1.99 per track, plus airtime, and those tracks cannot be moved from the phone to a PC. It also does not support music purchased from iTunes, as Apple does not license its Fairplay DRM.

Loudeye's music stores all operate outside of the United States. Nokia may be happy with that business, but it will be a shame if it becomes a truly competitive option for mobile music and never comes to the US.

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