Comes With Music - Nokia's generous offer for a longer term market gain

Nokia has announced that UK will be the first market where it will launch its much talked about “Comes With Music” service. The agreement with UMG (Universal Music Group), SONY BMG and Warner Music will ensure that users will have access to over 2.1 million music tracks. Carphone Warehouse will be the exclusive UK prepay channel to sell Nokia 5310 XpressMusic “Comes With Music” handset.

In general, adoption of most mobile music services has so far been slow and disappointing. Nokia hopes to change this trend and therefore unlike most other music services, “Comes With Music" will allow users to keep and listen to all the downloaded music even after the one year subscription period ends. However, many media reports have raised concerns on the business model and whether Nokia will be able to make any profit from the service.

Research from Informa Telecoms & Media shows that mobile music sales will generate over $12.3 billion in revenues in 2008. At present ringtones and ringback tones are contributing to most of the revenues but music streaming and full track download services will see strong growth in the next five years. The research is contained in the report, Mobile Music, 5th Edition, published recently by Informa Telecoms & Media.

“It seems that 'Comes With Music' forms part of a longer term strategy of Nokia. Therefore in the short term, it is prepared to offer what looks like a very generous service, at the expense of its own margins on certain handset models”, comments Shailendra Pandey, senior research analyst, and author of the upcoming Mobile Content and Services report.

“Also, 'Comes With Music' forms part of Nokia’s strategy to compete with rivals such as Apple and to drive the uptake of its Ovi services, including the purchase of music from its Music Store. Nokia believes that after the one year subscription period ends, many of the 'Comes With Music' users will continue to spend on music and purchase new tracks and releases from the Nokia music store, or will subscribe to unlimited access to its Music Store”, adds Pandey.

Mobile music industry needs to come up with radical new services that can tap intomobile-specific functions and find a business model attractive to users. The successfulbusiness models will be the ones that users vote for, not the ones that operators,handset manufacturers and other dominant players in the mobile industry impose on themarket.