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Nokia To Acquire Music Service Provider Loudeye

Loudeye aggregates the rights and content from major record labels and hundreds of independents, distributing a catalog of more than 1.6 million tracks.

Nokia Corp. on Tuesday said it has agreed to acquire Loudeye Corp. for $60 million in cash, a move that gives the mobile phone maker a platform for distributing music.

The deal would provide Nokia with Seattle-based Loudeye's media distribution services. The company aggregates the rights and content from major record labels and hundreds of independents, distributing a catalog of more than 1.6 million tracks. The company operates services in more than 20 countries across Europe, South Africa, Australia and New Zealand.

Under the agreement, Nokia would pay Loudeye stockholders $4.50 for each share of common stock. The transaction, valued at $60 million, is expected to be completed in the fourth quarter, pending approval from Loudeye stockholders and regulators.

The planned acquisition follows the wireless industry trend toward offering music downloads over cellular phones. Driving the move is envy over the multi-billion-dollar success of Apple Computer Inc.'s iPod, which accounts for more than two thirds of the portable media players used today. Market experts believe Apple will introduce in the near future a wireless iPod with voice capabilities.

Nokia in the second quarter sold 15 million music-enabled handsets, according to the company. Its music-optimized products are found in the Nseries product line, which also play video.

Anss Vanjoki, executive vice president and general manager of multimedia at Nokia, said in a statement that Nokia plans to help provide mobile-phone subscribers with the ability to access "all the music they want, anywhere, anytime and at a reasonable cost."

"With this acquisition, we aim to deliver that vision and a comprehensive music experience to Nokia device owners during 2007," Vanjoki said.

Nokia rivals LG Electronics and Motorola are also shipping handsets capable of downloading, storing and playing music and video. This month Verizon Wireless said it had exclusive rights to distribute in the United States LG's new Chocolate handset.

U.S. wireless operators are shipping multimedia devices in an attempt to increase revenue from their data services, which are still primarily used for text messaging.

Analysts, however, say it'll be awhile before carriers can offer a device that would pose a strong challenge to the Apple iPod.

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