In what may prove to be the most far-reaching digital music launch since iTunes, Omnifone today took the wraps off its MusicStation service.

The service gives mobile phone users access to the big four labels’ music catalogs on-demand for £1.99 (€2.99) a week, using a player that runs on mid-range feature phones and GPRS or EDGE networks, as well as high-end 3G phones – which Omnifone reckons gives it access to 70 per cent of the world’s phone users. Indie content will follow, it’s expected, as the indies are in the process of setting up their one-stop licensing arm Merlin, announced earlier this month.

As well as signing up the major four labels – UMG, Sony-BMG, Warner Music and EMI – Omnifone has inked deals with 23 network operators across the globe for MusicStation. The first of these rollouts – Telenor in Scandinavia and Vodafone’s Vodacom in South Africa – are confirmed for launch in Q2, with many of the others following in Q3.

In addition to the mobile-only service, a PC and Mac version of the MusicStation client will be available as part of a premium service costing £2.99 (€3.99) a week. With each plan, there will be no data charges.

Users will be able to receive share playlists, create personalized charts, and receive information about artists, concerts and promotions in the MusicStation player.

Omnifone, then offers a full-on challenge not only to Apple’s iTunes, but quite probably to MySpace too.

“Selling music is a legacy business,” CEO Rob Lewis told us. Lewis believes per-unit pricing is dead and the winners will be companies who offer the best subscription services.

He also believes MusicStation’s willingness to partner with carriers casts the Apple’s iPhone announce in a new light. Cingular agreed to Apple’s terms and disabled over-the-air music downloads to the iPhone – granting Apple exclusivity over acquiring content for the device, which must either be ripped from a CD or else be purchased through Apple’s own iTunes store. Verizon had balked at similar terms.

“iPhone is not good for operators,” Lewis said. “MusicStation is an all you can eat iTunes you can access from the bus, or anywhere.”

Partnering with the operators also gives Omnifone a global roll-out that PC-based companies can only envy, another contrast with Apple’s country-by-country exclusive world tour. Apple launched the US version of the iTunes store in spring 2003, with the UK following in summer of 2004, and Japan more than two years after the original launch. Lewis notes that in each market, 50 per cent of the catalog is local, something ignored by rivals.

So you can see why networks are keen on the start-up: all the music is sent over the networks directly to the phone. But what does it do for us?

Using MusicFone

Despite spending only a limited time in pre-launch briefings with MusicStation, it’s evident to us that Omnifone has delivered its promise to create a fast, simple and attractive music player. The service uses parallel downloading to speed up the process, so it downloads material in the background. It looks and feels the same even if you’re using a basic feature phone.

Another attractive feature is that if your phone is stolen, you retrieve all your state information – the music as well as metadata like playlists and news feeds – as soon as you’re up and running with the replacement.

However, Omnifone faces a challenge in a market turned off digital music by DRM. Lewis didn’t disagree that DRM was a hindrance – he described it as “a poo experience for customers” and a sign of a market that hadn’t grown up.

It isn’t clear yet to us whether MusicStation music expires with your subscription, but time-bombed subscription services, despite some clever marketing, have met with only much success on the PC. Will they on mobile?

In truth, no one knows yet. For the past century, radio has been the traditional vehicle for music discovery and physical product has been the primary means by which recording companies monetize their assets. Now things are blurring in lots of interesting ways.

For example, we don’t think of MySpace as an on-demand radio station, but that’s really what it is.

The challenge for Omnifone is persuading us that rather taking something away we already had, it’s giving us something we didn’t have before – that being “everything” and “everywhere”.

(People deeply resent a technological restriction when it raises obstacles, but ignore it completely when the value is tangible).

So much depends on how well Omnifone fulfills that ambitious promise. The “everywhere” part is pretty much solved in Europe, where ubiquitous 3G networks have all but snuffed out the business case for Wi-Fi. The “everything” part of the proposition, however, needs quite a bit more work.

The indies provide as much as 40 per cent of the world’s music, and Omnifone not only needs to get this repertory signed up fast, but it also needs to build up the kind of rich discovery service that eMusic provides today. This is something that isn’t top-down (big label A&R chart-driven) nor bottom up (fan lists) but depends on something in between, something that hinges on editorial expertise. Clever, but not too clever.

Viewed as a method of music acquisition, Omnifone may well prove to struggle like Napster. But as an on-demand radio service, then £1.99 may prove to be an attractive price point for music discovery – particularly with punters who think nothing of spending £5 to acquire a tribal emblem, in the form of a DRMed, 30-second ringtone. And the ringtone market generates more revenue every few months than Apple’s iTunes has managed in four years.

Alas, one unfortunate aspect about subscription services is that once you’ve “got” something, everyone else has got it too. On the other hand, even the dimmest bulbs at the world’s mobile network operators realize the £5 ringtone party is drawing to a close.