It’s not often that you’re in the audience for a something that significantly changes the landscape. Make no mistake, Nokia’s announcement in Amsterdam of their “Comes with Music” program is a game changing announcement, once you follow it through to its logical conclusion.
Firstly, to recap the news. Next year, a number of smartphones (most likely to be new Nseries devices) will ship with a voucher in the box that can be redeemed in the Nokia Music Store. This gives the account one year of unlimited downloads of tracks in the store. You can re-download as and when you need to, the tracks will not expire at the end of the subscription period, and you can move them between devices as you need to. Joining Nokia in this endeavor is Universal Music Group, the largest of the four major record labels which, between them, control of the order of 75% of music sales in the world.
Beyond the press release, there isn’t a huge amount of detail that’s not yet been covered. So the small print that’s likely to be important isn’t going to be around for some time yet – there’s always a chance that some sort of ‘fair use’ policy may be applied. But let’s go for the benefit of the doubt here, because this is such a simple pitch - “all you can eat for a year” - that I doubt that something sneaky is going to happen.
This year, Nokia have shifted some 50 million Nseries devices, and are expecting to sell 75-100 million devices next year. That’s a staggering number of digital media players considering that the Apple iPod’s cumulative sales figures from the launch of the first device only surpassed the hundred million mark in April 2007. In terms of unit sales, expect Nokia to claim 2008 as the year they became the largest digital music player manufacturer on the planet.
So with Universal Music on board, my first question is the rather obvious "will the other major labels also sign up to the service between now and the launch next year?" Of course, their tracks would be immediately available in the store (at pricing, which for the UK, is the de facto 80p per track). Assuming that SonyBMG, Warners and EMI get involved, this covers more than 75% of the total music market. Nokia are also working with smaller 'independent' labels to feature them in the store as well, so I'd assume they'd be offered a similar deal to be included in the 'Comes With Music' program - actually it would probably be a deal breaker because Nokia need 100% acceptance from every label featured in the store to make this work. I'm confident they are in discussion with those labels, and I'd expect to see them signed up by the time of launch.
Why the sudden change of heart from the labels, who've been digging their heels in over digital music, strict DRM locks, and wanting the right to price tracks at different levels in stores such as Apple's iTunes? Because the landscape is changing - and I think we're seeing Universal being the first to break cover and look for an alternative to DRM and to somehow keep control of the market.
Over the last decade or so, all the elements that allowed the major labels to have influence over musical tastes and purchasing have changed - control of expensive duplication, production and distribution. The power of the labels has reduced as the influence of independent and unsigned bands has risen. Take Koopa in the UK. Three Top 40 hits through internet sales alone and they're still unsigned. That would have been unthinkable even 18 months ago.
The last area where the major labels have ultimate control is in their marketing and PR budgets. They can still leverage, to a certain extent, who gets seen on stores on the High Street, who gets the appearances on TV shows, and who remains in the public eye.
The internet does threaten here as well - get on the front page of iTunes and any band gets an immediate lift in sales. But the iTunes store is somewhere the labels have little influence. I'm sure that any deal with Nokia is going to include a 'visibility for our artists' clause.
So if you follow through the idea that the four majors come onboard with Nokia in the 'Comes with Music' project, and that the penetration of Nseries devices (50 million this year, so safe to say somewhere between 75-150 million next year, and continuing to rise), there will rather quickly reach a point (probably early 2009) where the number of Nseries 'Comes with Music' enabled devices outweigh the number of other brand media players (including the iPod) in much the same way as Nokia took on, and then overtook, the camera market by sheer volume. Now if the people using these multimedia devices can just pick up any track they want, it's more than likely that these will be the tracks they see promoted on TV, or the ones recommended on the Nokia Music Store browser landing page - in other words the tracks from the major labels.
If this works out for them, then they get to be the digital music elephant in the room - it's for this reason that I think that the labels can see this being a game changer.
So what does Nokia get out of this? First of all, do not discount the power of "buy this and get all your music free for the next year" to have the ability to sell a bucket load of handsets. This is a powerful, simple, marketing concept and I think it's going to go down incredibly well with the mass market. Yes, power users are going to cry havoc at DRM, and point out that everything is on Bit Torrrent anyway, and I'm sure they'll continue to use it. This product is aimed at people who want an easy solution, who want one place to get their music, and the immediacy of the handset enabled store is going to be a killer feature. If you're out and about and you need to listen to some Elton John, then wham, it's in the store, it's downloading, it's on the handset and away you go.
It's also an interesting way to lock in customers. After the year of service runs out, users will return to using the music store as it is now - at 80p per track. Of course you can still re-download all the tracks you have previously obtained under the year's subscription, but if you want to have another year of free music (and I suspect that after a year of not caring about the price of music, you'll want to continue), your only option is going to be to buy another Nokia device which "Comes with Music."
Of course, the project and its effects are always going to be compared to the iPod and Steve Jobs over at Cupertino. It would not be an understatement to point out that if Jobs had taken to the stage and said that every new iPod would be able to download any track from the iTunes music store, for free, for a year... well, the internet would probably have melted, Angels powered by Leopard OS would have descended from heavens and annointed Jobs on the spot.
As it is, Nokia's version of the announcement came alongside a bundle of items involving Ovi, of which music is one of only seven key areas, so while I'm sure that the board in Finland fully understand just what a massive effect this deal will have on one landscape, it's only part of the play that Nokia is making. If they can shake up everything else as much as they just have with music, then Ovi just might be as important to Nokia as the change to moving away from being a paper mill into being the Nokia Rubber Works.
Ewan Spence, AllAboutSymbian