When Nokia (NYSE: NOK) announced its one-year free music offer “Comes with Music” with Universal yesterday, details were sparse. There was no word on which handset the service would be offered, how much the device would cost, how the service actually worked, or what happened to the deal once the 12 months had gone by. Where and what is the catch?

For consumers, who get to keep the songs they’ve downloaded after the year, the free service seems overly generous. But as Ars Technica reports, there is a snag. The songs will be DRM-protected using Microsoft’s PlaysForSure, a system that is incompatible with iPods and even Microsoft’s Zune. Some sources have speculated that once the year is up, consumers will probably be charged a subscription fee to keep the service going. But according to Ars Technica, if consumers want to renew their access to Comes with Music after the 12-month period, Nokia apparently has said consumers can buy a new handset.

How much is this deal costing Nokia? They’ve apparently taken on Universal’s nascent Total Music product, one that charges handset makers or wireless carriers a subscription fee—about $5 per month for each device sold--to give customers the free access to their music. But whether Nokia plans to subsidize the cost, which works out to $60 for the year, or to pass it on to customers is unclear, as they have not yet named the mobile phone that the service will work on.

For Universal, Nokia’s offering will test their theory that music offered for free on the device that the consumer chooses will help stamp out illegal downloads. Of course, the service merely passes on the problem of charging consumers for music to wireless operators and handset makers, who must then decide whether to eat the cost, or pass it on to consumers themselves. The FT speculates that the service “could steal some thunder from the iPhone, and tie users into the Nokia service,” though whether customers will want to upgrade to a new phone just after a year remains to be seen.

The real pressure could be on the operators, especially those who have invested heavily into building their own music services. “Few realised Nokia could come into the market with a service that blows operators’ music offerings out of the water,” Omnifone ceo Rob Lewis, told the FT.  UK operator 3 is expected to launch a streaming music service today.

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