Nokia's unlimited music offer turns market on head

Omnifone has a more carrier-friendly business model in which it shares revenues with operators and record labels. It has deals with all four major music labels as well as independents and has customers in Sweden, Hong Kong and South Africa.

MusicStation offers unlimited music at a starting price of about 35 pounds ($72) per month including some voice and text use, or 1.99 pounds a week for pay-as-you-go users, on a wide variety of handsets.

But, unlike the Nokia-Universal offer, customers cannot burn their music or transfer it onto a PC, meaning it is lost after the contract expires. They can share music with other MusicStation customers while their contracts are current.

Omnifone Chief Executive Rob Lewis said he welcomed Nokia's announcement, which he said would boost the market for unlimited music. "There's no longer any need to imitate the a la carte model of the iPod," he told Reuters in an phone interview.

"This is a very bold statement from Nokia, attempting to secure an element of the relationship with the end consumer that traditionally the operator has held very dear," he said.

"We've known for some time there's going to be a substantial battle in this space," he said, predicting a stormy six months ahead. "There's clearly going to be a rush to beat them."

(Reporting by Georgina Prodhan)