Nokia Denies Reports on Cost of Music Service

Nokia is denying reports it will pay Universal Music Group US$35 for every phone that offers access to Universal's music library via its upcoming Comes With Music service.

"That is not true. We are not paying that amount to any record label," said a spokeswoman at the Finnish phone giant.

But when it comes to the actual financial details of its deal with Universal Music Group, Nokia isn't ready to reveal specifics. Negotiations with the record company are still going on, according to Nokia.

Several media reports, citing sources close to the company, said that Nokia would pay up to $35 for every phone incorporating Comes With Music, speculating that this fee would drive up the price of the handsets.

Nokia Comes With Music was announced in December last year. It enables people to buy a mobile phone with a year of unlimited access to music. The plan is to launch during the second half of 2008, according to Nokia.

"We set out to create the music experience that people are telling us they are looking for -- all the music they want in the form of unlimited downloads to their mobile device and PC," said Anssi Vanjoki, executive vice president and general manager of its new Markets unit, at the launch.

But since the launch, Nokia has received criticism for its use of DRM (digital rights management) technology, which limits how tracks can be used.

Nokia is putting a lot of effort, and money, into the services side of its business. During Nokia's first quarter conference call CEO Olli-Pekka Kallasvuo touched on the subject on several occasions.

The future is a combination of phones and services, according to Kallasvuo.

"There is so much opportunity here," he said.