Loopt, a mobile location-based service that's been in operation for years, is taking on Foursquare with a new check-in service called Loopt Star that, among other things, will provide free music as prizes to users who earn certain achievements.

Loopt Star is like Foursquare in that it rewards users for checking-in to participating locations. These venues can then reward frequent customers with actual rewards, rather than only virtual ones, like the badges Foursquare offers.

Through a deal with Universal Music Group, Loopt will give away five free songs to users who check into participating bars. Initial artist participating include Mos Def, Lady Gaga, Miley Cyrus, Taio Cruz and La Roux. The songs will be refreshed every Tuesday.

The names and locations of participating bars will appear in Loopt's directory. It's part of an initiative that also includes Burger King and the Gap, who are giving away their own products in support of the initiative.

This is a good sign that competition is heating up among the location-based mobile companies. Loopt's been around since 2005, and has more than 3 million registered users, but the upstart Foursquare (which has fewer users) has received the majority of the media attention in this space this year.

Digital music tracks are an easy prize to give away to these services, and we should expect to see a lot more labels participating in such programs as a means of promoting new music. It seems fitting that live music venues or promoters would soon be giving away free tracks of the artists playing live at participating locations.