The rise shows that if Spotify is the music service that is getting all the attention at the moment, bringing lots of awareness of the streaming music model, it is also the case that its rising tide is also lifting other boats.

Rhapsody says that it is delivering on average more than 10 million tracks daily—meaning that it has a fairly high level of engagement from its paying users, with some 10 tracks listened to every day.

Rhapsody gives users the ability to stream unlimited amounts of music from its catalog of 13 million tracks for a flat fee of $9.99 per month. Unlike competitors like Spotify, it has not elected to run with a freemium model, although it does offer a free 14-day trial.

On the occasion of the million-subscriber milestone, I had a chat with Jon Irwin, Rhapsody’s president, about what the company has planned next:

On partnerships: Rhapsody claims to be available on more devices—more than 60—than any other music service; but so far the company has yet to sign a deal with a device maker to preload and have a special prime place on the device. That’s a key area for music companies to explore, since many OEMs do not have their own music services but still are keen to compete against the likes of Apple (NSDQ: AAPL) with combined device and content offerings. Irwin says that the company is currently speaking with device makers and may have something to announce “in 2012”.

Pursuing mobile users looks like a safe bet for the company: the number of subscribers already using the service via mobile is 40 percent, pointing to a clear audience looking for those kinds of services and willing to pay for them. The company already has partnerships with others in the mobile ecosystem: a deal with MetroPCS, for example, bundles the service together with the carrier’s prepaid data and unlimited text plans, as a way of encouraging users to take their higher-tier services. Verizon also bundles Rhapsody on to its LTE devices.

On Napster: At the end of November, Rhapsody completed the U.S. part of its acquisition of music streaming company Napster from Best Buy. Irwin says the next step will be to complete the acquisition of Napster’s European business and use it as a lever to finally move into international markets. Napster in particular has a strong position in Germany as well as the UK. It is unclear whether Rhapsody will rebrand Napster or whether the two products will initially co-exist together.

On competition/consolidation: Irwin is clear to try to point out how his service differs from the many others on offer, from Spotify and Rdio to Mog and most recently Rara. But ultimately these services are more alike than they are different, and consolidation is inevitable, he says.

“Our business is to take content that other people own, artists and composers, and distribute it on a patform to fans. We might do that directly or via a partner, but we take a very thin piece of that. The cost for labels and artists is the majority of what we receive,” he says. “We have to be efficient and at scale… It’s either go big or go home.”

On funding. Since breaking from Real Networks in April 2010, Irwin says Rhapsody has not had to raise any money from VCs to operate: one of the advantages of having a paid-only model is that the company has an incoming revenue stream every month and it operates its company accordingly. In contrast, he points out that those competitors that have raised more VC funds and are running through that cash quickly in the race to build up scale will have to at some point be able to show some kinds of returns. “The cost of giving way free music to try to get those free subscribers to toconvert starts to get expensive,” he said.

Related

• Apple Finally Brings iTunes Music And Movies To Latin America
• Deezer Goes Boldly Global, Thumbing Its Nose At U.S.
• Spotify Expected To Launch In More Countries This Week
• EMI Group Split Between UMG And Sony
• Rdio, Spotify Race To Launch In LatAm, Germany, Asia
• Deezer Signing Deals To Launch In 130 More Countries
• Research: Spotify Had 2.4 Million U.S. Users In September
• Pandora Learns The Hard Way, Mobile Ads Are Still Far From Being A Cash Cow
• Why Rhapsody Needs More Than Just Napster To Thrive
• Rhapsody Is Acquiring Napster From Best Buy

The news was reported by Bloomberg, citing an unnamed source. The development comes at the same time that Google is preparing to hold a music event tomorrow in Los Angeles, which we will be covering. It’s thought that Google will be revealing more about its music download store then.

A deal with Universal would be a huge boost for Google’s music effort, which has reportedly only signed up EMI so far. Sony (NYSE: SNE) Music and Warner Music have stayed away because of pricing and privacy concerns, according to the report.

Google may be revealing more of its music offerings tomorrow, but it won’t be its first moves into the space:

In May, the company launched a beta of what we currently know as Google Music, which is essentially a digital locker that lets users upload some 20,000 songs to listen to via a browser or Android device. In April, Google bought the Canadian startup PushLife for $25 million. PushLife has developed its own technology for mobile music purchasing, streaming and sharing services.

Tomorrow could see another advance in Google’s services combining these—and, with Universal’s blessing, hopefully with some content behind it to boot.

Universal is owned by the media conglomerate Vivendi (EPA: VIV) and is currently the world’s largest music company, accounting for 26 percent of all music sold. It represents artists that include Lady Gaga, pictured, and teenybopper heart throb Justin Bieber.

The reports of Universal’s purchase of EMI’s recording division have yet to be confirmed, but if it is true, that, when completed, will add another 9 percent of music sold worldwide to Universal’s control, according to Reuters.

Sony is reportedly buying the other half of EMI, its publishing division, for $2.2 billion. That means that EMI broken up is getting sold for about half of what Terra Firma paid when it bought EMI in 2007: £4.2 billion ($6.7 billion).

Related

• EMI Group Split Between UMG And Sony
• Google Buys PushLife For $25 Million: A Piece In Its Mobile Music Strategy?
• Google Music Beta Now On iOS Through The Magic Of The Mobile Web
• Google Music Beta Finally Live: 20,000 Songs In The Cloud
• Google To Bypass Record Companies, Launching Cloud Music Service
• The Dream Is Over: Music Labels Have Killed Their Digital Future
• WMG's Bronfman Jr: Mobile Music Services Like Google's Will Challenge Apple

On the heels of yesterday’s news that Apple has apparently inked a deal with EMI for streaming music—and today’s news that Sony has also been signed up— the blog Patently Apple has uncovered a patent filed back in Q4 2009 by Apple.

The big question, though, is whether this a smokescreen; a single bullet from the patent scattergun; or the real thing?

The application goes through some detail in describing the architecture for a cloud-based music system, even going so far as to include a mock-up of how iTunes would look with the new system incorporated into it:

It also includes potential scenarios for how it would work in terms of hosting media files on local devices and on external servers. From the description on the blog, there seem to be several scenarios listed for how such a system would work. Here are two:

Apple has filed a number of patents (links to two recent ones are here) that have yet to make their way into product form.

Why? Such moves might serve to keep competitors guessing about the company’s actual intentions; or be Apple’s way of making sure it is covering all bases in an increasingly patent-litigious climate.

But if the many other stories around Apple and cloud music that have been surfacing in the past few days are to be believed, this may be one to put in the “yes” pile.

The many cloud-based music services that have hit the market have been met with moderate (and sometimes no) success; with iTunes currently holding the majority of the digital music market, Apple could have a better chance than most to open those clouds up.

—Apple Cloud: On the heels of yesterday’s news that Apple has apparently inked a deal with EMI for streaming music, the patent blog Patently Apple has uncovered a patent filed back in Q4 2009 by Apple describing how a cloud-based music service would work. The big question: is this a smokescreen; a single bullet from the patent scattergun; or the real thing?

—NFC: Just when you thought you had heard enough about plans for NFC, at last we are now starting to see some actual commercial rollouts.Yesterday, Telefonica-owned O2 in the UK announced its first partners for its as-yet unnamed mobile wallet service. They include Visa Europe, Wave Crest, FIS and Intelligent Environments. Not to be outdone, France Telecom’s Orange today launched Quick Tap, its NFC service, in partnership with Barclaycard and MasterCard, along with the first handset for the service, the Tocco by Samsung. Both are going live this summer.

—Verizon: Nearly a year after Microsoft (NSDQ: MSFT) launched its latest mobile operating system, the biggest carrier in the U.S. is finally getting its first Windows Phone 7 device, the HTC Trophy. Will be interesting to see how this impacts WP7’s small market share, and whether Verizon will give it nearly as much fanfare as it did the iPhone when Apple’s device first went on to its network this year. (So far, the single press release marks a significantly different approach.)

—iPhone 4: In March, the chairman of China Mobile, Wang Jianzhou, made a speech in which he said that Steve Jobs expressed interest in developing an iPhone that would work on the country’s 4G standard, TD-LTE. Mr Wang either knows something, or is simply hoping that in saying the same thing over and over, he might will it to come true, because he’s been making the same remarks again. China has 600 million mobile users, and is apparently afflicted with an illness called “Apple fever”, two facts that are surely not lost on the Cupertino-based company.

—AT&T: And speaking of the iPhone, in the U.S. AT&T (NYSE: T) is the subject of a new lawsuit from users who claim that it has overcharged them by up to 300 percent for using data on the devices. AT&T denies wrongdoing.

—Apple/EMI: The arrival of a cloud-based music service from Apple looks like it might really be around the corner now. After many months of negotiations, Apple has long last inked a deal with EMI over streaming music, and has nearly completed similar deals with Sony (NYSE: SNE) Music and Universal Music Group, according to a report in CNET, citing unnamed sources in the music industry. Apple apparently already has a deal in place with Warner Music Group (NYSE: WMG)—although that has not been confirmed by either company. If true, this would help Apple steal a march on Google (NSDQ: GOOG) and Amazon (NSDQ: AMZN), which have also been looking to launch cloud-based music services, but have yet to ink the requisite licensing deals with the major operators.

—Verizon Wireless: The U.S.‘s biggest wireless operator has filed a lawsuit against the Federal Communications Commission over the regulator’s rules on mobile data roaming. The operator alleges that getting involved in mandating roaming agreements (and potentially pricing) is outside the FCC’s mandate. The suit, filed in the U.S. Circuit Court of Appeals in Washington, D.C., is the same court where Verizon filed its suit over the FCC’s net neutrality rules (a case that has, for now, been overturned on a technicality). Smaller, rural operators, predictably, are coming out in favor of the FCC in this case. (via Washington Post and Total Telecom)

—Mobile sales stats: The transformation of power players in the mobile device market continues apace. According to Q1 figures out from Gartner today, the top three handset makers worldwide in terms of unit sales (not value)—Nokia (NYSE: NOK), Samsung and LG (SEO: 066570)—all lost market share compared to the same quarter a year ago; while the next four—Apple, RIM (NSDQ: RIMM), ZTE and HTC—all gained or stayed level (RIM was the exception in that group, keeping the same market share). Despite this, at 25.1 percent, Nokia still represented a quarter of all handset sales. Among smartphones, Android was the most-sold platform, representing 36 percent of all unit sales; while Symbain took a 27.4 percent share and iOS took 16.8 percent.

—Millennial Media: As you would expect for a platform that is performing the best in terms of unit sales, Android also topped the list for Millennial Media’s latest figures for impressions on its mobile ad network. It took at 53 percent share of all impressions.

—More Apple: A look from ZDNet at how the media and analyst community totally missed the importance of Apple’s retail store strategy when the company fist launched it ten years ago; while Apple steps up its strategy to make the SIM—and therefore its mobile devices—even smaller, by filing an application with the European telecoms standards body ETSI, and getting the backing of mobile operator Orange for the project—surely a route preferable making “soft sims” and cutting out the operator altogether.

—Apple: During its iPad even earlier this week, Apple did not make any mention of entertainment cloud services in the form of MobileMe updates, although many had speculated that it would. That’s now spilled over into a fresh set of reports on what it is the Apple will do in the area of digital content “lockers.”

Looks like one of the reasons for the delay might be around negotiations with rights holders. Today Bloomberg reports that Apple is in discussions with the four major record labels—EMI, Sony Music Entertainment, Universal Music Group and Warner Music Group—about “easier access” to purchased music across multiple devices. None of the labels or Apple would confirm the story.

The deal, as described in the story, seems to fall short of a full cloud service, though: mentions are made of downloaded music, but there are no references to music already in an individual’s collection; and it may be the kind of deal that would only apply to Apple’s own devices, rather than across all consumer electronic gadgets that can play digital music. If that’s the case, the service would be far less useful for the majority of people. One notable detail is that whatever does get launched, labels are keen to make sure that it does not take away from the paid-for downloads music market, which still doesn’t make up for the downturn in traditional music sales but is at least growing.

As previously reported, it looks like this cloud storage service could end up being free of charge, as an extension of the MobileMe service; and it looks like the new, $1 billion data center in North Carolina might be the hub through which the service is run.

—Motorola: A week after Motorola (NYSE: MMI) Mobility Ventures, the VC arm of the device maker, announced an investment in cloud services company Catch Media, the company’s followed up with a second investment. This time, the target is Moblyng, a developer and publisher of cross-platform, HTML5 games for mobiles and social networks. Moblyng publishes such titles as m:Racing and Dungeon Quest, and works with others like Playdom to extend their games to the platform. The financial terms of the investment were not disclosed.

There’s certainly a lot of attention on gaming content for the mobile web rather than apps: the deal follows on from yesterday’s news that Disney (NYSE: DIS) acquired its own HTML5 games startup, Rocketpack.

But there have been some bum-notes for those singing the praises of HTML5. For one, the standard doesn’t look like it will be completed until 2014—although one part of it, the specs to incorporate 3D into HTML5, were released just today.

—Twitter: Are you an iPhone users? Do you like Twitter? Then you might want to think twice before updating your app if you’re using Twitter’s native client to access it. It’s getting some critical reviews for its ad placements and insertions of trending topics, taking up valuable real estate on the screen. On the other hand new features include link shortening, photo uploads, autocompletion of names and seeing conversation threads for direct messages—all probably useful additions for those of using the older version.

—Samsung’s Galaxy Tab: And so it begins… When the iPad 2 launched earlier this week it was only a matter of time before other tablet makers started to react. Today, Lee Don-Joo, EVP of mobile devices for Samsung, noted two areas in an interview with the Korean news agency Yonhap (via AFP): the pricing on its newest Galaxy Tab, a bigger model that originally would have been priced as more expensive than the current seven-inch model (Apple’s iPad 2 will cost the same as the current generation of tablets); and the thinness of the device.

Juniper analyst Daniel Ashdown tells mocoNews that currently iTunes makes up about 60 percent of mobile music market. Meanwhile, in digital music overall, iTunes accounts for 66.2 percent, according to December figures from NPD Group.

But while iPods have long dominated the portable, digital music player market (giving a strong push to the iTunes market), in smartphones we have seen a dramatic entrance from Android, and that’s not even considering the still-strong role played by Nokia (NYSE: NOK), as well as BlackBerry and others. Each of these platforms has been breeding a number of native and app-based music services, as well as offerings from mobile operators, which are all continuing to vie for business against Apple.

Just in the last day, Spotify raised $100 million to expand to new markets and platforms, and Verizon launched a new V-CAST mobile music service in the U.S. There are also reports that Google (NSDQ: GOOG) might be gearing up for its own Android music store to rival that of iTunes.

In its new report, Juniper points out that as mobile (and digital) music rise, the overall value of the music market will continue to fall, making these kinds of digital services ever-more important. Currently the record labels are making around 20 percent of their revenues from digital music, although at least one, EMI, is forecasting that to go up to 30 percent by 2013. A graphic representing figures from the IFPI shows the progress of that digital growth, and overall decline:

That’s not to say that all digital music services will work. This year we have already seen a u-turn from Nokia on its unlimited music download service. The company has promised a new service soon, which might link up with Microsoft’s Zune, now that the two have joined forces for smartphones.

And Apple (NSDQ: AAPL) is not sitting still, either. In addition to its new subscription charges, which could end up batting away the more alluring of upstarts, Apple, and other retailers, are now reportedly now in talks with record labels to work on improving the quality of downloaded music: if one retailer gets a quality edge over another, that could be a key differentiator in a sea of me-too mobile music services.

Juniper’s numbers leave some big questions unanswered: how big of a share mobile music is of the music market altogether, for one? The IFPI, in its annual report released in January 2011, says that digital music sales brought in $4.6 billion in sales worldwide in 2010. But putting that number alongside Juniper’s $3.1 billion for full-track downloads for 2010 would mean that mobile is already 67 percent of all digital sales, but Daniel Ashdown, Juniper analyst, says that he wouldn’t go so far as to confirm that mobile music is that dominant today.

Nor does the report drill down into looking at what kinds of devices are more “music friendly” than others. If Apple is largely as dominant in mobile music as it is in digital music overall, are the company’s iPhones also the most popular mobile music devices?

Ashdown says that for the moment, downloads are still the mainstay of mobile music users—a fact that is helped along by smartphones phones getting ever-more storage capacity. But he also says that a number of new music brands, such as Rdio and Spotify, are slowly leading a shift in consumption to streamed services.

So what can possibly hold up the pace of progress? The pirates, of course. P2P file sharing is getting more prevalent on mobile devices, as are apps that encourage this, for example a BitTorrent client—creatively named “BitTorrent Client/aBTC”—already in the Android Market.

Related

• Nokia Stumbled, But Mobile Music Services Are Still Gaining Ground
• Is Spotify's $1 Billion Value A Bubble Bellwether?

Nokia (NYSE: NOK), which had rebranded the service as Ovi Music Unlimited in August 2010, will continue to offer the service in six emerging markets—China, India, Indonesia, Brazil, Turkey and South Africa. And it is keeping its more conventional music store—where users pay for downloads—open in 38 countries.

The news was first reported by E’s Phone Blog, citing leaked documents, and confirmed by Reuters.

Comes With Music was Nokia’s attempt to compete against Apple’s iTunes music service, which it hoped to one-better by modelling it on the many unlimited music offerings that have made their way to mobile and PC platforms. The main idea was to use Comes With Music to attract music-listening consumers to buying Nokia devices.

Nokia waded into the music waters with confidence at first, securing agreement from all four major record labels—EMI, Sony (NYSE: SNE) Music, Universal Music and Warner Music—launching first in the UK with a splashy marketing campaign and offering 12-month subscriptions to the service when purchased with selected Nokia handsets such as the N97.

Nokia has not released numbers on how many people were actually using the service, but it did face some challenges. For one, the offering was largely unsupported (read unpromoted) by mobile operators, who were trying to push their own music services, or at least offerings that didn’t bypass them completely as Comes With Music did.

Another big problem was that “Comes With Music” tracks came with some fairly stringent DRM encoding. Users initially couldn’t listen to the music on anything other than their handsets, which ran counter to the trend among consumers to make their music significantly more accessible and share-able across multiple devices. More recently, the service in India currently lets users transfer between the phone and the PC, and the China service is actually promoted as “DRM-free.”

It’s interesting that Nokia is continuing the service in six markets. Consumers in China, India and Indonesia will still be allowed to buy selected devices bundled with a 12-month subscription. Brazil, Turkey and South Africa have six-month offerings.

It’s not clear whether these services will continue in these six markets because these are places where the service has seen stronger uptake; or whether it’s because these are still key markets for Nokia where it feels it needs to keep offering services like this to fend off competitive onslaught from companies like Apple and the many ODMs developing myriad Android devices. Likely a combination of the two.

People in the 27 markets where the service is being discontinued, who have already started subscriptions, will be able to use Comes With Music for the remainder of their contracts. Nokia also says subscribers will be able to keep their music for life.

The Ovi music store, which remains open in 38 markets, offers DRM-free music.

We are reaching out to Nokia to see if the company can confirm how many Comes With Music subscribers it has picked up.

Update: No numbers from Nokia itself but Music Alley reported in October 2009 that the service had only picked up 107,000 customers worldwide since its launch in 2008.

In a blog post, Nokia has cast the closure of its unlimited music service as a necessary step in its strategy to “deliver new, innovative music experiences”...that Nokia says it is creating in response to demand for more local content. “However, the new deals and other arrangements necessary for this to happen meant that old ones needed to be ended.” No details yet on what these new services will be, or when they will be launched.

Apple has been trying variations on the theme for a while, including album cards purchased at retail outlets with download codes and its iTunes originals. This would be “a new type of interactive album material, including photos, lyric sheets and liner notes that allow users to click through to items that they find most interesting.” In an intriguing twist, the format would allow listeners to bypass iTunes by letting them play music directly from the “album.” With variable pricing now in place, the labels could find a way if not to boost sales, at least to make more. (The “deluxe” edition of Green Day’s 21st Century Breakdown with two extra tracks is $14.99; the standard is $11.99. Both include a digital booklet.)

—Apple netbook:  It’s also tied in with the expected Apple netbook/tablet, a touch-sensitive device envisioned by some as an iTouch on steroids. The larger screen and portable format , which likely would be a big step up for movies and possibly a competitor to the Kindle DX, would make it more inviting for albums, or so the thinking goes, according to FT. 

According to the Nytimes.com’s Bits blog, Imeem is “caught between the storms of a capricious music industry on one side and the hard rocks of the Internet advertising market on the other.” The labels have a list of do’s and don’t for Imeem, one of which includes not allowing streaming on mobile because they believe that users will pay to get songs on their phone. It’s hard after all, to access a pirated track from a file sharing site on mobiles, and some tracks on mobiles are already selling for twice that on computers. But as Bits points out what happens though when mobile phone browsers are able to use Adobe’s Flash plug-in that would allow users to listen to the free songs offered by Imeem and its rivals, Last.FM and MySpace Music? Goodbye, business model. Still, this should give “Imeem a window of time, however short, to make a bit of money selling downloads and keeping the music labels from getting too upset.”

Related

• iMeem Adds Streaming To Android Mobile App

Related

• Industry Moves: Clearwire Names Likely Executives To Lead Post-Merger; CFO Will Leave

The prices seem steep in comparison with other paid download sites around: market leader iTunes, which will soon allow 3G iPhone users to buy songs, commonly offers single tracks for £0.79 ($1.09), while Amazon.co.uk goes as low as £0.59 ($0.77) for recently released singles. And Musically.com points out that unlike those download services, MSN Mobile tracks are not DRM-free. A message on the help section of the site reads: “When you purchase the music, you get unlimited plays for the content whilst it remains on the device. At this stage, you cannot transfer your music to another device or PC.”

The service should be working on 130 handsets with more added this year, but some folks have had some early problems getting it to work.

But the new technology sounds like the old way of doing business…If network operators distribute content on removable memory cards, and then restrict the accessibility of such content to only their subscribers, it’s just like the restrictions of the past. It’s not that it doesn’t make sense—in order to get free stuff from a carrier, customers should have to pay for it by sticking around for awhile. However, it all sounds very rudimentary, especially when you see carriers moving away from restrictions and even big music-players like Apple (NSDQ: AAPL) moving away from DRM. It also seems light year’s away from one of SanDisk’s other big initiatives. SanDisk is also working with music labels, and has convinced all four of the majors to sell its microSD memory cards pre-loaded with DRM-free MP3 music. Release.

In addition to recommendation being important, he said they are seeing some other general trends on what tracks are popular and how they are being stored: “If you buy each track separately, you want to keep them, but now people are deleting it.” Also crucial is having all new songs on the day they are released. “Once they fill their catalogs, they come back to see what’s new—chart coverage has to be perfect.”

Related

• Nokia Comes With Music Sales 'OK, But Not Earth Shattering'
• Nokia Comes With Music: Thanks For The Tracks, Now Give Us A Real Mobile Experience

2008 Olympics in Beijing: The worldwide Olympic games were considered the biggest example of a digital event, where content would be available en masse on the three screens: mobile, online and TV. The event was largely a success with NBC reporting surprising mobile traffic, and others seeing customers experiment with new content for the first time.

—Looking forward: The big question is whether these one-time users, who logged in for an addictive event like the Olympics, will continue to come back to the mobile phone for events with less significance. Already there’s predictions that massive numbers of people will turn to their phones for history-making events, such as the president-elect’s Barack Obama’s inauguration, but it will be more important to see an uptick for other major sporting and political events.

More after the jump on the App Store, Virgin-Helio, and other topics…

iPhone 3G and App Store: In July, Apple (NSDQ: AAPL) launched the iPhone 3G, while simultaneously launching the iTunes App store, which provided developers more direct access to consumers than ever before. The App store has encouraged a number of copycats that will be launched in the new year. As of early December, the App store had 10,000 apps, and there had been 300 million downloads.

—Looking forward: In order for the the App store and others to be relevant in coming months, they will have to provide a profitable business for developers and other companies in the ecosystem. One easy gauge of success will be whether a company making iPhone apps is acquired. Well, we don’t need to wait until next year to see that process starting. We saw one of the first sales a couple weeks ago. (German application developer FutureTap bought Where To, an application that lets users find points of interest around them using their iPhone’s GPS, from fellow iPhone developer Tap Tap Tap for $70,000). Others should follow.

Virgin Mobile (NYSE: VM) USA-Helio Merger: Earlier in the year, we reported first that this tie-up was likely to happen, and it turned out to be true. Publicly held Virgin Mobile worked together with Helio’s majority shareholder SK Telecom (NYSE: SKM) to craft a merger that would help Virgin succeed. The deal even includes support from Sprint (NYSE: S) Nextel, which has incentive to see the carrier do well since it’s piggy-backing on its network.

—Looking forward: So many MVNOs have not worked out. In 2009, Virgin Mobile will have to figure out the business model that works, but may have the additional benefit of being able to leverage the poor economy as people hesitate to sign long-term contracts with the major operators. Also, as an outcome of the merger, Virgin took over Helio’s content and development division, which wasn’t previously an area of focus for the budget-minded carrier. In 2009, we’ll closely watch Virgin’s transition into becoming a carrier that also caters to higher-end handsets with more data and services. While it may be able to rely on its lower-end subscribers, graduating to higher-end services, it will also be competing head on with the major U.S. carriers.

Clearwire-Sprint merger: After two tries, Clearwire (NSDQ: CLWR) finally completed a partnership with Sprint’s WiMax division. Clearwire will be responsible for building and operating a WiMax network, while Sprint will continue to own a substantial stake in the company. The deal included $3.2 billion in funding from Google (NSDQ: GOOG), Intel (NSDQ: INTC), Comcast (NSDQ: CMCSA), Time Warner (NYSE: TWX) and Bright house Communications.

—Looking forward: There are so many moving parts in this deal. Clearwire is up against a clock. It must roll out in as many markets as it can to beat its competitors, which have picked a competing standard. It will also face dwindling cash reserves and a tough economy. In early January, Clearwire will launch its first true WiMax network in Portland, Ore., and will have to stick to a rapid build-out schedule, while being strict on spending cash. It will also be marketing a new product—mobile Internet—to the mass market. To remain a going concern, it will have to convince Wall Street that it’s sitting on a huge opportunity. Good luck: This is how companies fail—or are made.

Google releases Android, and launches its first phone: Google delivered its first phone, the T-Mobile G1, built by HTC and sold by T-Mobile. While it is not clear how well it is doing, HTC says it will sell more than one million by the end of the year.

—Looking forward: In order for Android to be successful, it will have to sell tens of millions of devices, not just one million, built by one handset maker, sold by one carrier. The competition is intensifying with Apple and RIM (NSDQ: RIMM). Look for devices to be sold by Samsung, Huawei and Motorola (NYSE: MOT) in 2009. Ultimately, it may be the developers who decide which platforms succeed, and it is still unclear how successful the Android Market will be. To date, it has only distributed free applications, but that will change in the new year as Google opens it up to application sales. Interestingly, the revenues will be split by developers and carriers, unlike the model used by the Apple’s App store, which shares none with the carrier.

Sprint Nextel launches the Simply Everything Plan: It was rumored that Sprint was going to offer a $100 unlimited voice plan, but in the end, the struggling carrier offered voice plus data and services like navigation all for that $100 price. All the other carriers hopped on board, offering $99 unlimited voice plans, with only some including text messaging for free.

—Looking forward: Sprint is losing customers at such a rapid rate, it may yet offer an even more compelling plan. Still, the promotion seems like a flop at this point, as Sprint is not winning over new customers. Look for more marketing campaigns from Sprint to increase the hype in 2009.

Nokia (NYSE: NOK) buys Symbian and makes it open source: Nokia is undertaking one of the largest open-source endeavors ever, by paying $410 million to buy the remaining shares of Symbian that it did not already own and then turning the assets into a foundation that provides open-source software to developers and handset makers.

—Looking forward: In 2008, Symbian was on target to surpass 200 million cumulative sales since its inception 10 years ago. According to Canalys, it was the the leading operating-system smartphone market for the past year as of Q1 and had about 60 percent market share (with Linux having 12 percent; Microsoft (NSDQ: MSFT) (NSDQ: MSFT, 11 percent; RIM 11 percent; and Apple 2 percent). Clearly, the move was defensive, with competitors such as Linux and Google’s Android starting to ramp up, and others not charging a license fee. Timing will be everything, but it won’t be a 2009 event. By the first half of 2010, the foundation expects to release its first software version, which may be too late given that several more Android handsets will be out and maybe even Microsoft will have a new Windows Mobile version out.

Nokia Comes With Music: This was definitely one of the most anticipated events of 2008. Nokia launched its first handset that included unlimited downloads for a year that users were allowed to keep for life from the four major music labels, representing millions of tracks.

—Looking forward: The service in the end was a bit disappointing because it was inherently not mobile. Users could download all the music they wanted on their computer, and then tether their phone to the computer to transfer the music. It is not changing consumer habits. In 2009, Nokia will have to make this service more mobile. That may require Nokia to create a partnerships and possibly a rev-share arrangement with a carrier. The companies will have to be creative in order for each partner to continue to make money. Think advertising. If successful, the model could spread to other niches, like games.

—Zed gets RealTone JukeBox on Alltel: Zed’s first subscription-based BREW application is coming to Alltel (NYSE: AT). For $6, the service includes three ringtones per month which are pulled from a catalog spanning all four major record labels. Release.

—Sega Mobile launching “Samba de Amigo”: Sega Mobile has launched a mobile version of the popular maraca-shaking rhythm arcade game. Samba de Amigo is available now on T-Mobile and AT&T (NYSE: T) and will be available on Verizon Wireless (NYSE: VZ) later this year. Pricing varies from $3.50 to $8 depending on the carrier. Release.

—Billing Revolution for smartphones: The Seattle-based mobile billing and credit card payment company Billing Revolution has created a new checkout tool that allows developers to use the service on smartphones. Developers can now add billing capabilities to existing mobile applications running on Android, BlackBerry or the iPhone. 

—3 Sweden chooses JumpTap: Mobile operator 3 Sweden has chosen JumpTap, the white label mobile search and advertising company, to be its exclusive third party provider of mobile advertising on Planet 3, the carrier’s portal. It will also provide services for ad sales and campaign management. Release.

—EMI selling ringtones and full tracks via Mobile Messenger: EMI may not have a deal with Nokia (NYSE: NOK) yet for its Comes With Music service (although they could come on board at launch any day now), but its digital music catalog will be available as ringtones and full tracks thanks to a new arrangement with Mobile Messenger. The company has content distribution agreements in the U.S., U.K., Canada, Australia, New Zealand and South Africa. Release.

—Gawker taps Quattro for mobile effort and ads: Gawker Media is adding a suite of mobile WAP site, including five made specifically for the iPhone, through a new deal that makes Quattro Wireless the company’s exclusive wireless advertising and publishing partner. Gawker Media will soon launch three mobile sites for Gawker, Kotaku and Deadspin. Release.

Nokia’s music strategy is built around a sizable fee the handset manufacturer will pay to heavily subsidize its service, making a subscription included in the sale price of supported Nokia devices. Comes With Music, which won’t include over-the-air downloads, is expected to launch in the UK next month and includes a year’s worth of unlimited downloads when you buy a device. Nokia’s service will be side-loaded only, but customers will continue to own the music once the year ends. Customers using MusicStation will lose access to their music the minute they cancel their $9-plus monthly subscription.

Sony Ericsson (NSDQ: ERIC) is expected to launch its own unlimited music download service with all four of the major labels through a partnership with Omnifone in Britain any day now. Omnifone powers MusicStation, the same service Vodafone launched in Australia today, in numerous countries including the UK, Spain and Germany.

Update: Reuters reports that Sony Ericsson has given its unlimited music service a name: Play Now Plus. The company is now anticipating a launch within weeks and says it will allow customers to keep some of the songs after the subscription ends. Whether that means there will be a specific number of tracks customers can choose to keep in perpetuity is still unclear.

Related

• Sony Ericsson Jumping Into Unlimited Downloads As Well; Launching Before Christmas