Market Insight

Nokia introduces 'Comes with Music'

December 04, 2007


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On 4 December Nokia announced that from the middle of next year those who purchase a Nokia phone will receive a year's unlimited music downloads with its 'Comes with Music' service. It is a dual download model in that tracks can be downloaded to mobile and computer. All tracks will be DRM protected with Microsoft's PlayForSure. Unlike the typical music rental model, downloaded music can be kept at the end of the year's subscription. If users wish to renew the subscription, they can purchase a new 'comes with music' handset at the end of the year. The service will initially launch with content from Universal Music Group and the company is in talks with the three other major labels for additional content.

Launching a free music subscription service is an interesting move from Nokia whose recent launch of its Music Store, a paid for a-la-carte music download service, has not met with particularly good reception. Only two out of the five main UK operators are willing to sell the Music Store enabled devices due to the direct competition with their own services. Warner Music has refused to let Nokia distribute its music catalogue in the Music Store citing concerns over music piracy. If operators display the same reluctance towards the free Nokia subscription service the success of the handsets is likely to be limited. There is also the possible cost of the 'free' service. Universal are reportedly receiving a cut of each device sold. As content from further labels is added, the label share of device sales will also increase. It is unclear whether Nokia will subsidise this cost or pass it onto the consumer. If Nokia do pass the cost on, it will be interesting to see if the operators will subsidise the handsets on a pay monthly contract. The DRM on the files is very limiting. PlayForSure DRM is not compatible with ipods or even Microsoft's own Zune player. Although the subscription can be transferred to three different mobile devices throughout the year, the DRM restricts the user from transferring the files to another device at the end of the subscription period. Consumers will need to pay for each track that they wish to burn to CD. Subsidising the cost of the music downloads with the cost of the device has proven a successful model for Apple. However, it remains to be seen whether the draw of free music downloads will be strong enough to attract users to the Nokia handsets despite the restrictive DRM and potential high price of the handsets.

Organization
Nokia
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