Nokia to acquire US digital music firm for $60m

Nokia has agreed to buy US-based digital music distributor Loudeye for about $60 million, as the world's top mobile maker seeks to grab a larger share of the growing digital mobile music market, according to an Associated Press report.

The report said that under the deal, Nokia would pay $4.50 for each share of Loudeye, a provider of digital music platforms and digital media distribution services.

"By acquiring Loudeye, Nokia can offer consumers a comprehensive mobile music experience, including devices, applications and the ability to purchase digital music," Nokia said, according to the report.

Loudeye shares rose $2.56, or 145%, to close at $4.33 on the Nasdaq Stock Market. Analyst Ben Wood at Collins Consulting said the acquisition showed that Nokia was taking the offensive in its music strategy in the face of strong competition, particularly from Sony Ericsson's popular Walkman phones.

Nokia had previously cooperated with Loudeye in enabling mobile operators to provide a music download service over mobile phones such as Nokia's high-end N91 handset, the report said.

The company now aimed to provide a music download service under its own brand some time in 2007, possibly putting it in direct competition with its own operator customers, the report said.

Loudeye had deals with all the major record companies and provided a music distribution "engine" that was then branded by third parties who want to set up an online music store. Companies using Loudeye included Microsoft's MSN and Coca-Cola, the Associated Press report further said.