Nokia surprised the world on Tuesday with an agreement with Universal to let buyers of Nokia music phones download as much free music as they want in a 12-month period and is eyeing similar deals with other labels before the offer starts in the second half of 2008.

The plan appears to be a direct challenge aimed at everybody from Apple, of iPod and iTunes fame, and RealNetworks’ Rhapsody music subscription service to phone makers Samsung and Motorola as well as Nokia’s own customers, the mobile service providers who offer their own music services and often charging a wireless premium.

The deal has attracted speculation about what it really means. Gizmodo wonders if “Nokia is footing the bill and taking a loss to try to grab share from i-You-Know-Who.”

Nokia said the offer isn’t limited by the internal memory of a phone as customers can put their music on mini-storage cards. Also, unlike music subscription services, which you lose your music once you quit, Nokia and Universal will let fans keep everything they’ve downloaded in that year.

The financial terms of the agreement between the world’s biggest mobile phone maker and the world’s biggest music company were not made clear. One analyst — Mark Sue of RBC — questioned if free really means free in this case, saying that “higher prices are expected nonetheless for this bundled service.”

(Reuters)

Keep an eye on:

• If striking Hollywood writers do not reach a settlement with the studios in the next few weeks, the broadcast TV pilot season could be torpedoed. A long strike also could rattle the May “upfront” sales market, when the networks sell the bulk of their commercial time for the fall 2008 season. (Reuters)
• News Corp buys spirituality Web site Beliefnet. (FishbowlNY) (Reuters)
• Google seeks more ad partnerships beyond DoubleClick. (Reuters)
• MySpace to showcase music and sell performance videos. (NYTimes)