With all the talk that they’re getting a pasting over their upcoming Comes With Music service, it’s understandable that Nokia (NYSE: NOK) is getting a little miffed with all the speculation surrounding the service’s business model. In an interview with Reuters, Nokia’s head of music Liz Schimel tried to sweep away the notion that Nokia will pay dearly—almost suicidally so--to fund their foray into mobile music. Some have suggested that Nokia has agreed to pay Universal $35 for each Comes With Music handset sold. Other rumors say Nokia will have to pay an extra fee for all downloads beyond the first 35—potentially cutting deeply into the 40 percent margin it enjoys on its cellphones. We reported here it was closer to $33.50, and that there is a cap for that amount—up to 2.5 million handsets. A source familiar with the situation told us the deal also is not all-you-can-eat, but rather a limited but relatively high number of songs that is based on a download, not subscription model. (Nokia later rejected the rumor that they were paying that much and for an endless number of handsets, which is likely not the case.)

Schimel said that Nokia expected to make money both from the sale of their handsets as well as their music service, adding, “I can assure you that we are looking out for everyone’s interests in creating these new business models, including our own.” Shimel pointedly said she had read the various reports on Nokia’s service, and that they had “fundamentally misunderstood the concept behind the Comes With Music model.” She declined, however, to set the record straight.

Meanwhile, with Nokia keeping quiet on the business model, it’s easy to forget that Comes With Music has the potential to shake up the status quo. The current digital market was worth $2.9 billion in 2007. As Reuters (NSDQ: RTRSY) points out, Nokia sold 146 million music phones last year. Had all those phones included the “Comes with Music” bundle, just an extra $20 per phone would make the service bigger than the total market. As Tero Ojanpera, Nokia’s head of entertainment and communities business said in a press conference last week announcing their deal with Sony (NYSE: SNE) BMG, “Comes With Music has the potential to equal—and even exceed—the current value of the business. If we sell a single percentage of our total sales as Comes With Music bundles, the revenue for the music industry would be almost the same.”

• Nokia’s “Comes With Music,” Comes With A High Price
• Nokia Denies Paying Universal Music Group High Fees For Comes With Music