UPDATE 1-Nokia signs Warner to music deal

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HELSINKI, July 1 (Reuters) - The world's top cellphone maker Nokia (NOK1V.HE: Quote, Profile, Research) signed a deal with Warner Music Group (WMG.N: Quote, Profile, Research) to make Warner titles available through its "Comes With Music" service and Nokia music store, Nokia said on Tuesday.

"Comes With Music" from Nokia, the first cellphone maker to push heavily into content, would differ from other packages on the market as users can keep all the music they have downloaded during the 12 months.

"(Comes With Music) is the first global initiative to fundamentally align the interests of music companies with telecommunications companies," said Edgar Bronfman, Warner Music Group Chief Executive.

Nokia struck a deal with Universal (VIV.PA: Quote, Profile, Research) in December and Sony BMG (6758.T: Quote, Profile, Research) [BERT.UL] in April to offer tracks from their labels on the music service, to be launched in the second half of this year.

Having the three largest music labels on board looks set to help Nokia attract smaller music companies and challenge the dominant pay-per-track sales model for digital music.

Such unlimited download models could offer a shot in the arm to the ailing music industry, which is struggling to find ways to make up for falling CD sales. The music download market totalled just $2.9 billion in 2007.

Nokia sold 146 million music phones last year. If all these had included the "Comes with Music" bundle, just an extra $20 per phone would make Nokia's service bigger than the total market.

Record labels are looking to Nokia and others to challenge the dominance of Apple's (AAPL.O: Quote, Profile, Research) iTunes as they have struggled to negotiate with the U.S. group on a level footing on issues such as pricing. (Reporting by Sakari Suoninen; Editing by Quentin Bryar)