Sony Ericsson ready to challenge Nokia's 'Comes with Music'

Mobile phone company Sony Ericsson is expected to launch a music service within the next week designed to compete with Nokia's "Comes with Music" offering, according to recording-industry sources.

The Sony Ericsson service is being launched in partnership with British firm Omnifone, which provides unlimited music downloads to mobile service providers, according to the sources, who added that all four major recording companies have signed on.

The sources said Omnifone's MusicStation is expected to power the service, which may include a music-subscription model. A representative from Omnifone was not immediately available. And a spokesman for Sony Ericsson said the company had nothing to announce at this time and does not comment on rumors.

"This is the new frontier for a lot of these phone companies," said Mike McGuire, a digital music analyst. "Clearly Sony Ericsson can't be ignored. There should be some interesting potential in terms of linkage to other parts of Sony. Maybe you see it tied to the PlayStation or Sony Pictures. It's a pretty interesting ecosystem...but again, these things always look good on paper."

Sony Ericsson's service is obviously a challenge to Nokia's highly anticipated Comes with Music service.

Nokia attracted gads of attention when it announced it would offer the bundled music phone package a year ago. The company launched the new bundle earlier this month in conjunction with U.K.-based cell phone retailer Carphone Warehouse.

For the music industry, Comes with Music--which is expected to come to the U.S. sometime soon--is attractive because its really a new subscription model.

The way it works in the U.K is, starting in October, consumers there will be able to buy a Nokia 5310 Xpress Music device that will come with a free one-year music subscription to Nokia's Music Store. With that subscription, Nokia users can download as many songs as they want. And once the subscription ends, they will be able to keep those tracks.

Nokia has no plans to offer extended subscriptions to Comes With Music users. Instead, the only way to get more unlimited music downloads is to upgrade to a new Nokia Comes With Music device. While the 5310 Xpress Music device is the only one selling at the moment, Nokia plans to announce other Comes With Music phones later. Still, the fundamental strategy for Nokia appears to be using the music to sell more devices.

Nokia's strategy is a clear differentiator from other music stores and services. Apple's iTunes requires users pay for individual songs or albums. Verizon Wireless and RealNetworks have launched the new Rhapsody music store for mobile phones. It also allows subscribers to download and listen to as much music as they like for $15 a month. But once users stop paying the subscription fee, access to the music disappears.

Currently, users can only access the Nokia Music Store in 11 countries: Finland, the U.K., Germany, Ireland, Italy, Netherlands, Singapore, Australia, France, Sweden, and Spain. The company has said it plans to roll out more markets, but it hasn't said when. Considering that the North America is one of Nokia's most underrepresented markets, it's unlikely the Nokia Music store will be available in the U.S. anytime soon.

Nokia has deals with three of the four major record labels--Sony BMG, Universal, and Warner Music. It doesn't yet have a deal with EMI. But it's expected that EMI will sign on soon.

CNET News staff writer Marguerite Reardon contributed to this story.