The whole issue of music appearing on your cellular handset seems to be fraught with difficulties, and Nokia’s idea that the entire proposition needs to be free and incredibly simple, is perhaps beginning to resonate with the public and the record labels.
This week Warner Music Group finally came into line, not only with the Nokia Music Store, but also with its ‘Comes With Music’ proposition, whereby you buy a handset, and for the first year or so of ownership, you have access to something approaching 5 million tracks for free.
That number, 5 million, is roughly all of the music on iTunes or Rhapsody or any other online music service, and is reached when a music store owner has deals with the entire back catalogues of Universal Music Group, Sony-BMG, EMI and Warner, plus local labels and artists in the top 25 or so countries.
Warner had originally said in November that it would not allow its songs to be used on Nokia Music Store, until the Nokia Mosh social networking site, managed to find a way to police the uploading of Warner tracks to Mosh. Presumably that is now being carried out to Warner’s satisfaction.
But the Nokia ‘Comes with Music’ idea, first mentioned by Tero Ojanpera, executive VP of entertainment and communities for Nokia, at this year’s CTIA in April, goes one step further than a mere music store. It is very similar to an idea that Universal first tried out in the US with the Microsoft Zune MP3 player last October, which saw it get $100 for each device at the time it was purchased, and then it gave away music for free for the lifetime of the player ‘ although that deal was only one label, on one device in one country.
No-one has quite said what Comes with Music will mean for the financial equation between Nokia, the operator and the music label. Nokia handsets on average around the world cost around $100. However music phones are closer to $300 on average, with some far higher and some far lower. Operators already subsidize these devices and pay the full amount to Nokia, but some might also be convinced to subsidize some portion of the music subscription, with Nokia perhaps subsidizing the rest, based it expecting an increase in the sales levels of its music phones.
Out of a total of 437 million handsets that Nokia shipped last year, 136 million, some 31%, were music enabled. If Nokia were to have an off the shelf arrangement with numerous leading operators, then suddenly music on handsets becomes a ‘no brainer,’ at least for those music devices which are on monthly contracts around the world, the greater part of the expensive music phones, we expect.
‘Would you like Music with that Sir?’ is all it would take to upgrade to ‘Comes with Music,’ and now that a second member of the major music labels is onboard, and given that the other major labels already have their catalog loaded onto Nokia Music Store, and could easily join the service, almost all of those Nokia Music devices would become ‘Comes with Music’ devices over the course of the next 12 to 18 months, potentially giving it more music subscription customers than Apple.
In a way this is similar to the iPhone subsidies, whereby AT&T was giving a portion of revenue from the web browsing wireless data service back to Apple, except that on the iPhone, customers still have to buy their own music and sideload it to the iPhone. On ‘Comes with Music’ sideloading from the PC is still going to be the key way of getting music onto the phone, but it will be free, certainly for the first year, but potentially longer, and perhaps even the length of the handset contract.
It is still unclear whether ‘Comes with Music’ is going to be offered through major operators which already have their own music services, such as Vodafone and Telefonica, or whether it will just be offered by Nokia in a direct relationship with the consumer, in much the same way that its Ovi portal is being pushed. Certainly we would expect smaller operators to jump at a deal with Nokia, but also we would expect Nokia to ‘white label’ the service and let operators offer their own ‘Comes with Music’ program.
However Nokia has made it clear from the outset that its Nokia Music Store is being made available to other handset makers, if they want it, and the same is likely to be true for ‘Comes with Music,’ and while companies like Sony Ericsson with its own PlayNow portal, which includes music, are unlikely to buy-in, the other majors in Samsung and Motorola, may find they have no such issues.
The consumer experience will be free music on a device which remains cheaper than an iPhone, and just as good in terms of function, if not design. While iPhone music will still cost $1 a track.
If you add Nokia Maps to this whole sales story then music fans can look to a future where they might check out local music venues, buy tickets, possibly at a discount for having a Comes with Music subscription, navigate the directions to concert, and download the band’s music straight after they hear it ‘ all directly on their phone (or alternatively via their PC).
Almost as a direct response in the US this week, RealNetworks has unveiled its own “Music Without Limits” initiative, built around a DRM free version of its Rhapsody MP3 store and an unlimited mobile subscription service with Verizon Wireless in the US. But apart from promotional give aways, customers will still have to pay a monthly fee for the subscription, so it’s still not free like the Nokia service will be.