LG offers mobile phones with free music

Tarmo Virki

BARCELONA, SPAIN: LG Electronics will start to sell mobile phones in few months time giving consumers full access to free music via Omnifone's MusicStation download service, UK-based Omnifone said on Tuesday.

LG's first full-access music phone is set to hit the market months ahead of a similar offering from the world's top cellphone maker Nokia, which unveiled its plan to start selling phones with free music access in December last year.

"Nokia's announcement was a wakeup call for many, especially in the music industry," said analyst Paolo Pescatore from CCS Insight.

Vivendi's Universal Music, the world's largest music label, has agreed to license its music for Omnifone's MusicStation Max programme and for Nokia.

While Nokia is offering free access to all the music for 12 months, telecom operators may charge extra for Omnifone's music programme within their data packages.

Omnifone has licensing agreements with all the major music labels and offers music services through carriers including Vodafone and Hutchison.

Such unlimited download models could offer a shot in the arm to the music industry, which is struggling to find ways to make up for falling CD sales -- something that pay-per-track online stores like Apple's iTunes have so far failed to do.

"The music industry has understood that this model alone is not big enough to outweigh the decline in CD sales," said analyst Mark Mulligan from Jupiter Research.

"2007 was the worst year for the European music industry ever. That is why the music industry is considering deals which it would earlier never thought of," he said.

Omnifone said the first LG MusicStation Max 3G handset, with touch screen, is due to be released in the first half of 2008, with more similar phones to follow. Financial terms were not disclosed.

"Consumers will come to expect unlimited mobile music downloads direct to their phone, whenever they want," said Rob Lewis, the head of Omnifone.

"2008 is definitely the year for mobile music. With Nokia's 'Comes with Music' and the iPhone, every operator and handset manufacturer knows they will definitely lose out this year if they don’t come out with a compelling offering," Lewis said.