Mobile phone giant Nokia plans to buy digital music distributor Loudeye for $60 million.

The move is widely regarded as heralding an attempt by the mobile phone maker to develop its own music download service to compete with iTunes.

Loudeye is an industry veteran. Its Windows-only service supplies the backbone for 60 music services in 20 countries. It currently offers a catalogue of 1.6 million tracks.

Nokia revealed that it sold 15 million music-enabled mobiles in the April-June quarter.

Anssi Vanjoki, European vice president and general manager of multimedia at Nokia said: "Music is a key experience for Nokia and Nokia Nseries multimedia computers. People should be able 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."
 
Under the terms of the agreement, Loudeye stockholders will receive $4.50 per share in cash for each share of Loudeye common stock. The transaction is expected to be complete by the end of the year.