Nokia signs Warner Music for 'Comes with Music' phone plan

Reuters reports today that Nokia Corp. (NYSE: NOK) has signed up Warner Music Group Corp. (NYSE: WMG) to its "Comes with Music" phone service and music store. Nokia is the world's top phone manufacturer and will be making a direct challenge to Apple Inc. (NASDAQ: AAPL)'s iTunes Store, according to numerous reports. The "Comes with Music" service is the first from a phone manufacturer to "push heavily into content" and "differs from other packages on the market as users can keep all the music they have downloaded" while in yearly contracts with Nokia.

WMG executives allowed the music company to join up with Nokia since the service "is the first global initiative to fundamentally align the interests of music companies with telecommunications companies." Nokia already secured the support of fellow music companies Universal Music Group and Sony BMG Music Entertainment in April, and "Comes with Music" launches later this year. Reuters speculates that the agreements with three of the top four music companies (EMI Group has not signed up yet) will "help Nokia attract smaller music companies and challenge the dominant pay-per-track sales model for digital music." Last year, download sales totaled $2.9 billion; if the 146 million Nokia phones had featured "Comes with Music", those sales would have surpassed the digital market.

Record labels have consistently looked for new methods to challenge Apple's grip on the music industry, and subscription models like "Comes with Music" may finally provide that challenge. Subscription models give the music industry more shares per download since users typically are not allowed to keep tracks downloaded during the subscription. "Comes with Music" is betting against that model since users will be allowed to keep music downloaded, and Nokia and the record companies are no doubt hoping that dynamic will keep those consumers renewing contracts with the service. Reportedly, the subscription for "Comes with Music" will only cost $20 per phone, which on a yearly basis would not be too expensive for unlimited downloads.